Full text of "1977 Recommendations and Reports, Volume 1"

Digitized by the Internet Archive

in 2010 with funding from

Public.Resource.org and Law.Gov

http://www.archive.org/details/adminconf196870unse

RICHARD K. BKRG

t2:{r> 2.-VI II sr. \.

AKI.IN<.T(»\. \ \. 222(»;

Recommendations and Reports

of the ADMINISTRATIVE

CONFERENCE

OF THE

UNITED STATES

JANUARY 8, 1968-JUNE 30, 1970
VOLUME

726 Jackson Place - Washinston, D.C. 20506

COUNCIL MEMBERS

JERRE S. WILLIAMS
Chairman

FRANK M. WOZENCRAFT, V ice-Chairman, lawyer, Houston, Tex. Former
Assistant Attorney General, Department of Justice.

WILLARD DEASON, Commissioner, Interstate Commerce Commission.

WALTER GELLHORN, Betts Professor of Law, Columbia University
School of Law, New York, N.Y. Former Director, Attorney General's
Committee on Administrative Procedure.

ROSEL H. HYDE, lawyer, Washington, D.C. Former Chairman, Federal
Communications Commission.

JOE M. KILGORE, lawyer, Austin, Tex. Former member of Congress.

LEONARD H. MARKS, lawyer, Washington, D.C. Former Director, U.S. In-
formation Agency.

EDWARD L. MORGAN, Deputy Counsel to the President.

HAROLD L. RUSSELL, lawyer, Atlanta, Ga. Former Chairman, Adminis-
trative Law Section, American Bar Association.

WHITNEY NORTH SEYMOUR, Sr., lawyer. New York, N.Y. Former Pres-
ident, American Bar Association.

RICHARD C. VAN DUSEN, Under Secretary, Department of Housing and
Urban Development.

FORMER MEMBERS OF THE COUNCIL

Manuel F. Cohen, lawyer, Washington, D.C. Former Chairman, Securities
and Exchange Commission.

William W. Golub, lawyer, New York, N.Y.

Frank Pace, Jr., President and Chief Executive Officer, International Execu-
tive Service Corporation, New York, N.Y.

For sale by the Superintendent of Documents, U.S. Government Printing Office
Washington, D.C. 20402 - Price $4.50

FOREWORD

This is the first in a series of Reports that will publish the
official Recommendations of the Administrative Conference of the
United States, the research Reports in support thereof, and other
important Conference documents.

The period January 8, 1968, when the Conference was first
activated, through June 30, 1970, is covered in this volume
During this time, four Plenary Sessions were held and 22 official
recommendations were adopted. This volume prints all official
documents and the names of all persons who have served as mem-
bers of the Conference during this period. The Appendix includes
the enabling statute, the bylaws, and a list of all participating
agencies, including an opinion determining those agencies to
have statutory membership and those designated for membership
by the President.

The 1969 Annual Report of the Administrative Conference
contains a detailed discussion of its methods of operation and
activities through December 31, 1969.

ill

STAFF OF THE
ADMINISTRATIVE CONFERENCE

John F. Cushman
Executive Director

Emory N. Ellis, Jr.*
Executive Secretary

David E. Kartalia

Staff Attorney

Margie W. Barnes

Executive Assistant

Ruth M. Hartman
Secretary

William L. Banks
Clerk

Connie Foley
Clerk-Typist

*Succeeded Webster P. Maxon who resigned October 4, 1969 to become Executive Director.
Federal Power Commission.

CONTENTS

Introduction

Members of the Conference

Recommendation
Recommendation

Recommendation 6

Official Recommendations of the Administrative Con-
ference OF THE United States

Recommendation 1: Adequate Hearing Facilities . -

U.S. Government Organization
Manual

Parallel Table of Statutory Au-
thorities and Rules (2 CFR
ch. 1)

Consumer Bulletin . --

Representation of the Poor in
Agency Rulemaking of Direct
Consequence to Them

Delegation of Final Decisional
Authority Subject to Dis-
cretionary Review by the

Agency

Recommendation 7: Elimination of Jurisdictional

Amount Requirement in Judi-
cial Review

Judicial Review of Interstate
Commerce Commission Or-
ders -_

Statutory Reform of the Sov-
ereign Immunity Doctrine

Judicial Enforcement of Orders
of the National Labor Re-
lations Board

Publication of a "Guide to
Federal Reporting Require-
ments

Analytical Subject-Indexes to
Selected Volumes of the Code

of Federal Regulations

Recommendation 13: Elimination of Duplicative

Hearings in FAA Safety De-
certification Cases

Recommendation 8:

Recommendation 9:

Recommendation 10:

Recommendation 11:

Recommendation 12:

Page
1

9
9

11
12

20
22

24
24
25
25

ADMINISTRATIVE CONFERENCE OF THE UNITED STATES

Page

Recommendation 14: Compilation of Statistics on Ad-
ministrative Proceedings by
Federal Departments and
Agencies 26

Recommendation 15: Consideration of Alternatives

in Licensing Procedures 28

Recommendation 16: Elimination of Certain Exemp-
tions from the APA Rulemak-
ing Requirements 29

Recommendation 17: Recruitment and Selection of

Hearing Examiners ; Continu-
ing Training for Government
Attorneys and Hearing Ex-
aminers; Creation of a Cen-
ter for Continuing Legal Ed-
ucation in Government 30

Recommendation 18: Parties Defendant 32

Recommendation 19: SEC No- Action Letters Under

Section 4 of the Securities
Act of 1933 34

Recommendation 20: Summary Decision in Agency

Adjudication 36

Recommendation 21 : Discovery in Agency Adjudica-
tion 37

Recommendation 22: Practices and Procedures Under

the Renegotiation Act of
1951 43

Texts of Committee Reports in Support of Recommen-
dations Nos. 1-22 45

Recommendation 1 45

Recommendation 2 58

Recommendation 3 62

Recommendation 4 66

Recommendation 5 71

Recommendation 6 122

Recommendation 7 169

Recommendation 8 181

Recommendation 9 190

Recommendation 10 237

Recommendation 11 268

Recommendation 12 271

Recommendation 13 273

CONTENTS

Recommendation 14
Recommendation 15
Recommendation 16
Recommendation 17
Recommendation 18
Recommendation 19
Recommendation 20
Recommendation 21
Recommendation 22

ADDITIONAL REPORTS OF THE ADMINSTRATIVE CONFERENCE

OF THE United States .~'lu

Remission and Mitigation of Forfeitures in the
Justice Department

Vll
Page

284
297
305
378
415
437
543
571
663

696
697
761

Appendixes „^^

Administrative Conference Act ' ^^

^, 7d5

Bylaws ' ' „^q

Composition of the Administrative Conference /b»

Opinion Defining Independent Boards and Agencies _ _ 770

Presidential Designation of Agencies ^^^

INTRODUCTION

The Administrative Conference of the United States was es-
tablished as a permanent, independent Federal agency m 1968.
It is a sizable deliberative body composed of top-level Govern-
ment officials and persons of national reputation m admmistra-
tive law drawn on a part-time basis from private life. Its mission
is to develop improvements in the Federal administrative proc-
ess-that vast complex of formal and informal legal machinery
which the Federal agencies use to carry out national policies and
to determine the rights, privileges, and obligations of individual
citizens and private businesses. The Conference is supported by
a small permanent staff and by a number of legal scholars em-
ployed on a temporary basis, consisting mostly of professors of
administrative law.

The Act provides that the Administrative Conference shall
consist of not more than 91 nor less than 75 members, of whom
not more than 36 may be appointed from the private sector^ The
Conference at present consists of 82 members: 11 Council Mem-
bers (including the Chairman), 39 members from 33 Govern-
ment agencies, and 32 from the private sector.

The Chairman is appointed by the President for a five-year
term, with Senate confirmation. He is the only member who
serves on a full-time, compensated basis. All other members, in-
cluding the members of the Council of the Conference, the gov-
erning board appointed by the President, contribute their
knowledge, experience, and services without compensation.

Some thirty departments and agencies conduct the bulk of ad-
ministrative procedures affecting private rights. There is infinite
variety to such proceedings. They range from the grant ot a
television license worth millions of dollars to the processing of
applications for amateur or citizen band licenses; from the
processing of an application to merge railroads of the magnitude
of the New York Central and the Pennsylvania to authorizing
truck transportation of a particular commodity over a particular
route; or from the approval of a prospectus for a major new
corporation to permitting cattle to graze on federal lands. Be-
cause of this steady flow of Federal agency determinations af-
fecting our natural resources, transportation, power, finance.

2 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES

communications, commerce, securities, taxation, labor, credit,
advertising-, housing-, veterans' benefits, the supply, quality, and
price of food and fibers, public health, immigration, social wel-
fare programs, drug control, and countless other areas of ac-
tivity, the administrative process, in one way or another, con-
tinuously exerts its influence upon every citizen in his personal
and business affairs. All citizens are vitally interested in how
efficiently these agencies operate. The public seeks and is entitled
to fair and expeditious action at minimum cost.

The statute grants to the Administrative Conference only the
power to make recommendations. Full responsibility for the
proper performance of agency functions remains with the agency
heads. However, because officials from all of the major agencies
are included in its membership, and because of the prestige of
the total membership, it is contemplated that official recommen-
dations of the Administrative Conference will be adopted in most
instances where they are applicable. In addition, the Chairman
is required by the Act to assist the agencies in putting recom-
mendations into effect and to report at least once a year to
Congress and to the President the recommendations made by
the Conference and the extent of their implementation by the
agencies.

In 1952 Mr. Justice Jackson observed: "The rise of adminis-
trative bodies probably has been the most significant legal trend
of the last century . . . Perhaps more values today are affected
by their decisions than by those of all the courts."

The publication of the official recommendations and reports of
the Administrative Conference is designed to inform the public
of proposed changes in agency procedures to make them fairer,
less costly, and more expeditious. It is also the expectation of the
Conference that such publication will stimulate the agencies and
the public to continue to seek improvements in the procedures
which are necessary to make our government work.

Jerre S. Williams,
Chairman.

MEMBERS OF THE CONFERENCE
(June 30, 1970)

Carolyn E. Agger, lawyer, Washin^on, D.C. Former attorney, Department
of the Treasury, National Labor Relations Board.

C. Paul Barker, lawyer, New Orleans, La. Former attorney, National Labor
Relations Board.

St. John Barrett, Deputy General Counsel, Department of Health, Educa-
tion, and Welfare.

Frank A. Bartimo, Assistant General Counsel, Department of Defense.

Charles F. Brannan, General Counsel, National Farmers Union, Denver,
Colo. Former Secretary of Agriculture.

William H. Brown, III, Chairman. Equal Employment Opportunity Com-
mission.

Charles W. Bucy, Assistant General Counsel. Department of Agriculture.

J. W. Bullion, lawyer, Dallas, Tex. Former attorney, Bureau of Internal
Revenue, Department of the Treasury.

Clark Byse, Professor of Law, Harvard Law School, Cambridge, Mass.
Former attorney. Department of Commerce, Securities and Exchange
Commission.

John T. Chadwell, lawyer, Chicago, 111. Authority on trade regulations and
antitrust law. Active in Antitrust Committee, American Bar Association.

Harold J. Cohen, General Attorney, American Telephone & Telegraph Co.,
New York, N.Y. Former Chief, Common Carrier Bureau, Federal Commu-
nications Commission.

Donald C. Cook, President, American Electric Power Co., Inc., New York,
N.Y. Lawyer and former member of Securities and Exchange Commission.

Arthur H. Courshon, chairman of board, Washington Federal Savings &
Loan Association of Miami Beach, Miami Beach, Fla. Lawyer and former
member of task force, Federal Home Loan Bank Board.

William J. Curtin, lawyer, Washington, D.C. Active in airline and trucking
labor disputes.

Kenneth Gulp Davis, John P. Wilson Professor of Law. University of Chi-
cago Law School, Chicago. 111. Author of treatise on administrative law.

Philip Elman, Commissioner, Federal Trade Commission.

Norman A. Flaningam, lawyer, Washington, D.C. Chairman, Committee on
Practice and Procedure, Federal Power Bar Association.

Thomas J. Flavin, Judicial Officer, Department of Agriculture.

4 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES

Jefferson B. Fordham, Dean, University of Pennsylvania Law School, Phil-
adelphia, Pa.

Warner W. Gardner, lawyer, Washington, D.C. Former Assistant Secretary
of Interior. Served also as Solicitor, Department of Labor, and as Solicitor,
Department of the Interior.

William T. Gennetti, Deputy General Counsel, Small Business Administra-
tion.

Whitney Gillilland, Board Member, Civil Aeronautics Board,

Howard A. Glickstein, Staff Director, Commission on Civil Rights.

George A. Graham, Executive Director, National Academy of Public Admin-
istration, Washington, D.C. Former consultant. Hoover Commission; Direc-
tor of Government Studies, Brookings Institution.

Robert W. Graham, lawyer, Seattle, Wash. Former member. Attorney Gen-
eral's Committee to Study Antitrust Laws.

Dale W. Hardin, Commissioner, Interstate Commerce Commission.

Patrica Harris, lawyer, Washington, D.C. Former Professor of Law and
Dean of Howard Law School. Served also as Ambassador to Luxembourg.

Ferrel Heady, President, University of New Mexico, Albuquerque, N. Mex.

George H. Hearn, Commissioner, Federal Maritime Commission.

Arthur E. Hess, Deputy Commissioner, Social Security Administration.

S. Neil Hosenball, Deputy General Counsel, National Aeronautics and
Space Administration.

Richard H. Keatinge, lawyer, Los Angeles, Calif. Former chairman. Admin-
istrative Law Section, American Bar Association.

John T. Koehler, lawyer, Washington, D.C. Former Assistant Secretary of
Navy. Served also as Chairman, Maritime Administration, and as Chair-
man, Renegotiation Board.

Jim C. Langdon, Chairman, Texas Railroad Commission. Austin, Tex.
Former Chief Judge, Court of Civil Appeals, El Paso, Tex.

Arthur W. Leibold, Jr., General Counsel, Federal Home Loan Bank Board.

Sol Lindenbaum, Executive Assistant to the Attorney General, Department
of Justice.

Charlotte Tuttle Lloyd, Assistant General Counsel, Department of the
Treasury.

Phillip A. Loomis, Jr., General Counsel, Securities and Exchange Commis-
sion.

J. Edward Lyerly, Deputy Legal Adviser for Administration, Department of
State.

Ross L. Malone, Vice President and General Counsel, General Motors Corp.,
New York, N.Y. Former President of the American Bar Association.

MEMBERS 5

Hart T. Mankin, General Counsel, General Services Administration.

Malcolm Mason, Associate General Counsel, Office of Economic Opportunity.

Wilson Matthews, Director, Hearing Examiners Office, Civil Service Com-
mission.

Mitchell Melich, Solicitor, Department of the Interior.

Edward B. Miller, Chairman, National Labor Relations Board.

James B. Minor, Assistant General Counsel for Regulation, Department of
Transportation.

John N. Nassikas, Chairman, Federal Power Commission.

Nathaniel L. Nathanson, Professor of Law, Northwestern University,
Chicago, 111. Former Associate General Counsel, Office of Price Administra-
tion.

C. Roger Nelson, lawyer, Washington, D.C. Former Chairman, Administra-
tive Law Section, American Bar Association.

David A. Nelson, General Counsel, Post Office Department.

Lenoard Niederlehner, Acting General Counsel, Department of Defense.

Thomas J. O'Connell, Deputy General Reserve System.

Nathan Ostroff, Chairman, Appeals Board, Department of Commerce.

Max D. Paglin, Executive Director, Federal Communications Commission.

Samuel R. Pierce, Jr., lawyer. New York, N.Y. Former judge. Court of Gen-
eral Sessions, New York. Served also as Assistant to Under Secretary of
Labor.

Edwin F. Rains, Deputy Commissioner of Customs, Department of the
Treasury.

James T. Ramey, Commissioner, Atomic Energy Commission.

Emmette S. Redford, Ashbel Smith Professor of Government, University of
Texas, Austin, Tex. Former advisor. Office of Price Administration, Presi-
dent's Committee on Government Organization and Bureau of the Budget.

Fred B. Rhodes, Deputy Administrator of Veterans Affairs, Veterans Ad-
ministration.

Charles S. Rhyne, lawyer, Washington, D.C. Former President, American
Bar Association.

Merritt Ruhlen, Hearing Examiner, Civil Aeronautics Board.

Howard Schnoor, Director, Government Organization Staff, Office of Execu-
tive Management, Bureau of the Budget.

Bernard G. Segal, lawyer, Philadelphia, Pa. President, American Bar Asso-
ciation.

Ashley Sellers, lawyer, Washington, D.C. Former Chairman, Administrative
Law Section, American Bar Association.

6 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES

Laurence H. Silberman, Solicitor, Department of Labor.

Curtis W. Tarr, Director, Selective Service System.

Earl J. Thomas, Director, Office of Inspection, Department of Interior.

Starr Thomas, Vice President — law, Santa Fe Railw^ay, Chicago, 111. Former
President, Association of Interstate Commerce Commission Practitioners.

Sherman Unger, General Counsel, Department of Housing and Urban De-
velopment.

Thomas H. Wall, lawyer, Washington, D.C. Former attorney, Federal Com-
munications Commission.

Howard Westwood, lawyer, Washington, D.C. Active in Administrative
Law and Legal Aid.

Former Conference Members with Positions
ot Time of Membership

Robert C. Cassidy, Assistant Director for Administration, Office of Economic
Opportunity.

John H. Crooker, Jr., Chairman, Civil Aeronautics Board.

Paul Rand Dixon, member and former Chairman, Federal Trade Commis-
sion.

Charles Donahue, Solicitor of Labor, Department of Labor.

David C. Eberhart, Director of the Federal Register, General Services Ad-
ministration.

Robert P. Forrest al, Assistant Secretary, Federal Reserve System.

Bernard A. Foster, Jr., lawyer, Washington, D.C. Former attorney. Federal
Power Commission, Federal Trade Commission. Deceased.

John Harllee (Rear Adm., USN, Retired), Chairman, Federal Maritime
Commission.

Lewis B. Hershey (General), Director, Selective Service System.

John W. Kopecky, Deputy Associate General Counsel, Department of Hous-
ing and Urban Development.

Frank W. McCulloch, Chairman, National Labor Relations Board.

Timothy J. May, General Counsel, Post Office Department.

Alan J. Moscov, General Counsel, Federal Home Loan Bank Board.

George Robinson, Deputy Assistant Secretary for Administration, Depart-
ment of the Interior.

William P. Rogers, lawyer, Washington, D.C. Former Attorney General of
the United States. Resigned when appointed Secretary of State.

MEMBERS '

Fred B. Smith, General Counsel, Department of the Treasury.

Daniel Steiner, General Counsel, Equal Employment Opportunity Commis-
sion.

A. W. Stratton, Deputy Administrator of Veterans Affairs, Veterans Ad-
ministration.

William L. Taylor, Staff Director, Commission on Civil Rights.

Edward Weinberg, Solicitor, Department of the Interior.

W. Edwin Youngblood, Hearing Examiner, National Labor Relations
Board.

Lee C. White, Chairman, Federal Power Commission.

Philip F. Zeidman, General Counsel, Small Business Administration.

OFFICIAL RECOMMENDATIONS OF THE

ADMINISTRATIVE CONFERENCE

OF THE UNITED STATES-AS OF JUNE 30, 1970

RECOMMENDATION NO. 1
ADEQUATE HEARING FACILITIES '

Administrative hearings of the Federal Government should be
conducted in dignified, efficient hearing rooms, appropriate as to
size, arrangement, and furnishings. At the present time no cen-
tral body is responsible for providing or planning the needed
facilities. As a particular consequence, administrative hearings
often have been conducted in surroundings unsuitable to the
seriousness of these governmental proceedings. The General
Services Administration could advantageously arrange for the
service and the space needed by departments and agencies in
which administrative hearings occur.

RECOMMENDATION

1. The General Services Administration should develop a set
of four hearing room classifications explicitly identifying the
features required with standards meeting at least the following
minimum requirements. Such classifications should be developed
in conjunction with representatives of the agencies, the bar, and
examiners. The minimum requirements should be :

Type A — A formal conference room with table space for as
many as 16 principals and additional seating for up to 20
other persons.
Type B — A small hearing room with a raised dais, a wit-
ness box, a reporter's table, table space for as many as
six counsel, and additional seating for up to 30 others.
The design and furnishings should be appropriate to a
hearing which is judicial in nature and should include
wherever possible an auxiliary room in which counsel may
confer with their clients, witnesses may be sequestered,
etc.

^Recommendations Nos. 1-8 were adopted December 10-11, 1968.

10 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES

Type C A large hearing room accommodating as many as

30 counsel at tables and up to 70 witnesses and spectators.
This room should have the design and furnishings which
are appropriate to formal hearings of a judicial nature.
Type D— An auditorium suitable for hearings of general
public interest which might attract over 100 principals
and spectators.
An essential requirement of each of the four types of hearmg
rooms should be a small, nearby room available to the exammer
as his office and for such other uses as he designates.

2. The General Services Administration should prepare and
maintain on a current basis an inventory which (a) identifies
available hearing facilities throughout the country, classified un-
der the system recommended in 1 above, including hearing rooms
permanently assigned to particular agencies as well as court-
rooms (local. State, and Federal), (b) identifies the GSA re-
gional offices, local building managers, and others through whom
such space can be obtained, and (c) provides information con-
cerning the procedures to be followed to obtain space through
the GSA for the conduct of hearings.

3. The General Services Administration should establish pro-
cedures for determining the frequency and location of adminis-
trative hearings which require facilities of each type within the
system of classification recommended above in order to deter-
mine, by city, whether a permanent hearing room for multi-
agency use can be justified. A permanent hearing room should be
considered justified wherever there is a continuing need of ap-
proximately one-fourth of the available working days.

4. The General Services Administration should provide for the
administration and scheduling of permanent multiagency hear-
ing facilities under the direction of GSA's Washington headquar-
ters, but subject to such decentralization as the functions of
inventorying, procuring, and planning may require.

5. The General Services Administration should establish a
procedure for the systematic reporting, to the respective agency
and to GSA, of deficiencies in assigned facilities discovered by
presiding officers, and for the investigation and correction of
such deficiencies.

6. The General Services Administration should establish an
advisory committee of members of the bar and other interested
professional associations, agency representatives, and members
of the public to facilitate the evaluation of present and future
needs and to report annually to the Administrative Conference
on its activities.

OFFICIAL RECOMMENDATIONS H

7. Permanent multiaRency hearing: rooms and hearing rooms
permanently assigned to individual Federal agencies should be
identified as "Federal Administrative Hearing Rooms."

8. The Chairman of the Administrative Conference should en-
courage the cooperation of State and local judges in the procure-
ment of courtroom space for Federal administrative hearings.

9. The Judicial Conference of the United States should en-
courage the cooperation of Federal judges in the procurement of
courtroom space for Federal administrative hearings.

10. Federal agencies should budget funds to provide for the
payment of charges for the use of appropriate space when such
space is not available on a free basis.

11. Federal agencies which conduct administrative hearings
should designate an official to work with the General Services
Administration in the procurement and planning of hearing
facilities.

RECOMMENDATION NO. 2
U.S. GOVERNMENT ORGANIZATION MANUAL

The manual at present falls short of its goal because the narra-
tive text submitted by some of the agencies is outdated, unreveal-
ing, cumbersome, or otherwise deficient. The text should be re-
written at a high level of competence.

RECOMMENDATION

1. Each agency covered by 5 U.S.C. 552 should assign the
writing of material for the "U.S. Government Organization Man-
ual" to an office having the competence to achieve the brevity,
clarity, and general excellence of presentation required to serve
the purpose of this handbook and to reflect credit on our govern-
ment.

2. Included in the description of each agency should be in-
formation concerning the means by which more detailed knowl-
edge of the agency's organization and functions may be obtained.

RECOMMENDATION NO. 3

PARALLEL TABLE OF STATUTORY AUTHORITIES
AND RULES (2 CFR CH. I)

The Parallel Table of Statutory Authorities and Rules (2 CFR
ch. I) should be an accurate and complete listing of United

12 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES

States Code provisions cited as rulemaking authority in executive
agency documents which prescribe general and permanent rules.
The present Parallel Table is deficient. Agencies have not given
sufficient time and attention to citing proper authorities and to
keeping them current. Moreover, the Table's present method of
preparation leads to omission of relevant references.

RECOMMENDATION

1 Each agency covered by 5 U.S.C. 552 should review all of its
rules published in the Code of Federal Regulations to determine
if the cited rulemaking authorities are complete, accurate, and
current. The Conference requests that formal documents cor-
recting deficient citations be submitted to the Office of the Fed-
eral Register for publication in the daily "Federal Register."

2 The Office of the Federal Register should take the steps
necessary to broaden the coverage of the Table to include perti-
nent citations in preambles and in codified text as well as those
in the formal statements of authority.

RECOMMENDATION NO. 4
CONSUMER BULLETIN

Most Americans are probably unaware of the multitude of
day-to-day Federal activities reflected in proposed, revised, and
recently promulgated rules, regulations, or determinations which
substantially affect the price, quantity, quality, labeling, safety,
and other aspects of products and services available to the public.
A bulletin of general distribution containing an easily under-
stood summary of current information about administrative ac-
tivities in areas of consumer interest could serve a widespi^ead
public need which is not now met by the "Federal Register or
by agency and private publications of a more specialized nature.

RECOMMENDATION

1. A consumer bulletin should be established on an experi-
mental basis. It should extract and paraphrase in popular terms
the substance of Federal agency actions of significant interest
to consumers. Initially, the bulletin should concentrate on items
published in the "Federal Register," but as it gains pubhc ac-
ceptance, it should be broadened to include materials secured

OFFICIAL RECOMMENDATIONS 13

from other sources. It should indicate expressly that the bulletin
does not constitute official notice of government action.

2. The Office of the Consumer Counsel in the Department of
Justice appears at this time to be the agency best prepared to
publish such a bulletin. If the bulletin were undertaken by that
office, it could not only disseminate information, but also stimu-
late public response, thus aiding the effective discharge of the
duties of the Consumer Counsel.

3. Initial circulation should include the press, consumer orga-
nizations, public and scholastic libraries, and individuals who
request to be put on the mailing list. Format, subscription costs,
frequency of publication, and related matters should be the sub-
ject of study during the experiment.

4. After a reasonable period of time, the effectiveness of and
interest in the bulletin should be evaluated to determine whether
it should be continued and, if so, in what form.

RECOMMENDATION NO. 5

REPRESENTATION OF THE POOR IN AGENCY RULE-
MAKING OF DIRECT CONSEQUENCE TO THEM

RECOMMENDATION

A. Agency Efforts

1. Federal agencies should engage more extensively in affirma-
tive, self-initiated efforts to ascertain directly from the poor
their views with respect to rulemaking that may affect them
substantially. For this purpose, agencies should make strong
efforts, by use of existing as well as newly devised procedures,
to obtain information and opinion from those whose circum-
stances may not permit conventional participation in rulemaking
proceedings. The "rulemaking" referred to is that defined by
the Administrative Procedure Act, §2(c), 5 U.S.C. 551 (4)
and (5).

2. Agencies should employ as many of the following procedures
as are feasible, practicable, and necessary to assure their being
fully informed concerning the relevant interests of the poor :

(a) Agencies should seek to inform the poor of all rulemaking
proposals that may affect them substantially and should provide
opportunities for the poor to submit their views concerning these
and related proposals.

14 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES

(b) Agencies should hold formal public hearings or informal
conferences in close geographic proximity to the poor substan-
tially affected by contemplated rulemaking.

(c) Agencies should take care to invite individuals constitut-
ing a representative cross-section of the poor to submit then-
views orally or in writing as to proposed rules substantially af-
fecting the poor.

(d) Agencies should conduct field surveys among the poor to
discover their attitudes concerning particular government policy-
making substantially affecting them.

(e) Agencies should use advisory committees made up of rep-
resentatives of the poor as continuing consultants for all pro-
grams having a substantial effect on such persons.

(f) When necessary to assure adequate representation for the
poor, agencies should pay the personal expenses and wage losses
incurred by individuals incident to their participation m rule-
making hearings. Congress should support agency requests for
funds and for authority, where none exists, to make discretionary
payments for this purpose. Agencies already authorized to make
such payments in whole or in part should use their existing
authority and should allocate funds accordingly.

In deciding whether the use of any one or more of the above
devices is feasible, practicable, or necessary in a given situation
agencies should resolve doubts in favor of utilizing them; but
their enumeration should not exclude or discourage the develop-
ment and use of other devices to achieve the same result.

In carrying out paragraphs 1 and 2 of this recommendation
agencies should consult with and coordinate their efforts with
other Federal agencies having responsibilities in this area and
should make maximum feasible use of the facilities of such other
agencies for communicating with and obtaining expressions of
the views of the poor.

3 Agencies should be encouraged in appropriate circumstances
to determine that the exemptions in 5 U.S.C. 553(a) (2) should
not be applied with respect to rulemaking which may have a
substantial impact on the poor.

B. People's Counsel

4 (a) An organization should be authorized by statute to em-
ploy a staff to act as "People's Counsel." The People's Counsel
should represent the interests of the poor in all Federal adminis-
trative rulemaking substantially affecting the poor.

(b) The People's Counsel should be charged with assuring that

OFFICIAL RECOMMENDATIONS 15

the views of significant separable minority interests among the
poor are represented in such Federal administrative rulemaking.

(c) The People's Counsel should be required to disseminate to
all interested poor people's organizations pertinent information
concerning rulemaking substantially affecting the poor.

(d) The People's Counsel should be authorized to participate
suitably in its own name to represent the interests of the poor
in any Federal agency proceedings in which the poor have a
substantial interest.

(e) The People's Counsel should be authorized to provide rep-
resentation for organizations and groups of the poor who seek
judicial review of administrative action substantially affecting
their interests. This recommendation is not to alter the kinds of
agency action amenable to judicial review, the requirements of
standing to seek review, or the scope of that review.

(f) As an incident to its main responsibilities the People's
Counsel should be empowered to recommend to Congress or the
President or to both such legislation or other action as it deems
appropriate to correct deficiencies in or otherwise improve Fed-
eral programs having a substantial impact on the poor.

5. (a) Congress should provide for an appropriate body to
perform the functions outlined in section 4. Deserving of con-
sideration as such body would be a new single-purpose corpora-
tion, to be created by Congress, modeled on the Corporation for
Public Broadcasting, Public Law 90-129, 81 Stat. 368 (1967),
47 U.S.C. (Supp. Ill) 396, and to be known as the People's
Counsel Corporation. In the event this form of organization is
adopted, the following considerations should apply:

(1) The People's Counsel Corporation should be made tax
exempt and authorized to accept grants of private funds.
Gifts to the Corporation should be made deductible as chari-
table contributions for Federal income tax purposes.

(2) Federal financing of the Corporation should be made
available to the extent necessary to assure its effective
operation.

(3) The governing board of the People's Counsel Cor-
poration should be constituted to give the poor meaningful
representation thereon. Such body should be constituted to
ensure close communication with the poor and effective rep-
resentation of the viewpoints of the poor.

16 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES

u Ih ti not fv the People's Counsel as soon as practicable

!f^ a7; — ™:"lr— fn. substantially affectin, the poor
„L ohonld be required to give the Counsel as soon as practicable
afoppor^unHy to communicate to the agency its views concern-
ing the desirability of further action with respect to such rule-

" Without prejudice to creating or empowering any other ap-

--H f a d rz-:::^^^^^^ - -

S't r 'dtttl m'a^Lum Vantage of *e capaMlitie^ ni
tWs field of nongovernment organizations, and of other pubhc
lodies including notably the Office of Economic Opportunity.,

SEPARATE STATEMENTS = CONCERNING RECOMMENDATION NO. 5

Statement of John H.Crooker, Jr. _

The majority position with respect to recommendation No 5

-de^ge— ri^a- ^^ri^=-^

^e Adm^isUtive Conference, to have ^'"'''^-"^^.tMstrft ve'
formation collected and interchanged, so that administrax.
agencts might improve and expedite their genera procedures
''Therefore, I doubt that the Congress in enacting sect^n o
the Administrative Conference Act, 5 U.S.C. 5M, mienueu
Ihe cZference should address itself to the matters treated in
*re:ommeTdation No. 6. My dissent is not, in any way, directed to

the wording of the recommendation.

. iinwB- "A member who disagrees

^ Title 5. U.S.C.. sec. 575(a)(1) provides, in part ^y^^J' ^^ ^^^er a dissenting opinion
.ith a recommendation adopted by the ^--bh^^^Ve^ce proceedings, and the opinion and

;roLr:ntrerr.f airnr^^^ - ^ ---"- - '-

tribution thereof."

OFFICIAL RECOMMENDATIONS 17

Statement of Paul Rand Dixon

I disagree with the adoption of paragraphs 4, 5, and 6 of recom-
mendation No. 5 developed by the Committee on Rulemaking
respecting the creation of a People's Counsel to represent the
poor generally before Federal administrative bodies. I am fully
aware of and sympathetic with the plight of the poor in our
society. I recognize it as one of the primary problems that must
be solved if our democratic way is to survive. However, I am
fully of the opinion that this is a problem that should be debated
and resolved by Congress. I find nowhere in the legislative history
leading to the creation of the Administrative Conference of the
United States any thought that the Administrative Conference
would delve into this social problem. Even if I could bring myself
to the thought that it was rightfully within the purview of the
duties of the Administrative Conference to deal with the plight
of the poor, I still would question the wisdom of creating a Poor
People's Counsel as the sole, if not principal, protector of the
rights of the poor. The plight of the poor needs everyone's pro-
tection, not just the protection of a People's Counsel.

So that my position will not be misunderstood, I want it
clearly known that I stand in the forefront of those who deem
it necessary to do more to protect those low-income people in
our society who are generally classified as poor.

Statement of Joe M. Kilgore, joined by Richard H. Keatinge;
Jim C. Lang don; Norman A. Flaningam; ^ Ross L. Malone;
Starr Thomas; Harold L. Russell

We did not support paragraph 4, 5, and 6 of the recommenda-
tion No. 5. We do support encouraging the formation of and
recognition of a People's Counsel, as a private entity, to represent
the public interest in the area of rulemaking in Federal agencies ;
with such Counsel being oriented to represent most fully those
of the public whose interests would otherwise be unrepresented
or underrepresented ; and with such People's Counsel being eligi-
ble to receive Federal grants as required to permit its function.

This dissent from the majority view is dictated by:

1. The concern that this proposed function should be restricted,
at least until experience might dictate otherwise, to the rule-
making function.

2. The belief that the proposed representation should not be

' Mr. Flaningam joins in this statement noting that the term "rulemaking" as used herein
refers to Federal agency processes for formulation, amendment, or repeal of rules of general
applicability.

18 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES

limited to any segment of the public, even though its principal
thrust would be so directed.

Statement of Malcolm S. Mason

I support the purposes of this recommendation. When a People's
Counsel is constituted, however, it is important to make a dis-
tinction between two kinds of advocacy, so different that they
cannot be directly conducted by the same organization. There is
first of all adversary advocacy, owing an attorney's complete
loyalty to a specific client. In this sense, there cannot be a
People's Counsel for the poor, because the poor are many and
different and must be able to speak with many voices. This kind
of advocacy is needed. It must be aggressive and hardhitting. If
it is conducted directly by a Government or Government-con-
trolled agency, its independence may be impaired. For this kmd
of advocacy an appropriate model is suggested by the Legal Serv-
ices program conducted by many separate private local organiza-
tions : Funded by GEO, but free, and indeed encouraged, to act
fully on behalf of an actual client without limiting its vigor by
reason of relationship to GEO. This, I believe, will also be the
pattern of the new HEW Legal Services program.

There is also cooperative advocacy: Unaggressive, quiet, non-
adversary, seeking to foster an awareness, a concern and a more
lively recognition that poor people are affected by proposed ad-
ministrative action. This kind of advocacy can be conducted by
a Government or quasi-Government organization without incon-
sistency and with benefit to the effectiveness of its work. An
appropriate model is suggested by such accomplishments as new
rules on loans to demonstration cooperatives of poor farmers
(achieved by mutual agreement of the Department of Agriculture
and GEO) ; new clarification of Government security regulations,
removing barriers to the employment of hard-core unemployed
with a criminal record (achieved by joint action of the Depart-
ment of Defense, Department of Labor, and GEO) ; a new con-
sensus on the wider use of policy advisory boards in programs
affecting the poor (resulting in part from encouragement of this
kind of action by GEG).

I urge that the Conference recommendation be implemented.
In its implementation, contributions already made in this field
should be recognized and used as a basis for expanded activity.
The distinction between the two different types of advocacy
should also be reflected in the choice of appropriate structure.
Both are needed.

OFFICIAL RECOMMENDATIONS 19

Statement of Nathaniel L. Nathanson

I would like to explain why I voted in favor of the recommenda-
tion for a People's Counsel, as amended during the debate, because
I believe that my interpretation of the final action taken may have
been shared by others who also voted in favor of the proposal
and is therefore entitled to some consideration in efforts to secure
its implementation.

While I was deeply troubled by some of the arguments ad-
vanced against the proposal, particularly by the misgivings ex-
pressed concerning the arrogance of a government agency or
public corporation undertaking to determine the interests of the
poor in particular agency action, I felt that this concern could be
met by emphasis upon the representative character of the People's
Counsel and a requirement that specific, identifiable interests be
represented, rather than hypothetical interests which might be
imagined by the People's Counsel. This requirement could ap-
propriately be implemented by the further r^^quirement that those
interests be identified in the form of particular groups or associa-
tions who could determine their own interests and make their
own wishes or basic positions known to the People's Counsel.
This view was certainly made explicit in the amendment, pro-
posed by the Judicial Review Committee and accepted by the
Rulemaking Committee, to paragraph 4(e) and it is also consist-
ent with the final language of paragraph 4(d) as amended in
the course of the debate so as to substitute "participate suitably"
for the original word "intervene." This left a large measure of
discretion to each agency in allowing participation by the People's
Counsel in a particular proceeding, including the requirement of
a showing that the concern or position which the People's Counsel
undertook to present was in fact shared by an identifiable group
of people who were at least informed of the position which the
People's Counsel was taking. I also doubt that the leaders of the
poor people's movement who were quoted by Professor Bonfield as
favorable to the proposal envisaged a People's Counsel who would
not be in any way answerable to the people he undertook to
represent.

I appreciate that this interpretation, emphasizing as it does the
representation of identifiable groups who may exercise some con-
trol over the People's Counsel, may not be entirely acceptable
to the original proponents of the proposal, particularly those who
accepted the amendments with some reluctance. Nevertheless,
they did accept the amendments, presumably for the purposes of
mollifying the opposition and with some appreciation of the fact

20 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES

that the reasons for the amendments were more than technical.
Particularly in view of the closeness of the vote on the final ap-
proval of paragraphs 4, 5, and 6, the original proponents are
hardly now in a position to insist upon the rejection of a reason-
able interpretation which may have been decisive in the approval
of the recommendation. They may also take comfort in the fact
that the current requirements for standing to participate in
both administrative and judicial proceedings by groups indirectly
affected by governmental action will scarcely inhibit the activ-
ities of a People's Counsel anxious and resourceful enough to find
out what the people he purports to represent really want.

Statement of Robert W. Graham

May I respectfully record my dissent from the recommenda-
tions of the Conference embodied in paragraphs 4, 5, and 6 of
recommendation No. 5. No one can disagree with the stated ob-
jectives of these recommendations, and I do not. However, I do
not conceive that these recommendations are appropriate within
the mission of the Administrative Conference in its efforts to
seek improvement of administrative procedures. Furthermore, I
consider unsound attempts to fractionate the public interest which
is properly the concern of our Federal administrative agencies.

RECOMMENDATION NO. 6

DELEGATION OF FINAL DECISIONAL AUTHORITY
SUBJECT TO DISCRETIONARY REVIEW BY THE AGENCY

RECOMMENDATION

1. In order to make more efficient use of the time and energies
of agency members and their staffs, to improve the quality of
decision without sacrificing procedural fairness, and to help elim-
inate delay in the administrative process, every agency having a
substantial caseload of formal adjudications should consider the
establishment of one or more intermediate appellate boards or
the adoption of procedures for according administrative finality
to presiding officers' decisions, with discretionary authority in
the agency to affirm summarily or to review, in whole or in part,
the decisions of such boards or officers.

2. Section 8 of the Administrative Procedure Act, 5 U.S.C.
557, should be amended as necessary to clarify the authority of
agencies to restructure their decisional processes along either of
the following lines:

OFFICIAL RECOMMENDATIONS 21

(a) Intermediate appellate hoards

(1) Whenever an agency deems it appropriate for the efficient
and orderly conduct of its business, it may, by rule or order :

(a) Establish one or more intermediate appellate boards
consisting of agency employees qualified by training, experi-
ence, and competence to perform review functions,

(b) Authorize these boards to perform functions in con-
nection with the disposition of cases of the same character
as those which may be performed by the agency,

(d) Restrict the scope of inquiry by such boards and by
the agency in any review, without impairing the authority
of the agency in any case to decide on its own motion any
question of procedure, fact, law, policy, or discretion as fully
as if it were making the initial decision.

(2) Any order or decision of an intermediate appellate board,
unless reviewed by the agency, shall have the same force and ef-
fect and shall be made, evidenced, and enforced in the same man-
ner as orders and decisions of the agency.

(3) A party aggrieved by an order of such board may file an
application for review by the agency within such time and in
such manner as the agency shall prescribe, and every such ap-
plication shall be passed upon by the agency.

(4) In passing upon such applications for review, an agency
may grant, in whole or in part, or deny the application without
specifying any reasons therefor. No such application shall rely
upon questions of fact or law upon which the intermediate ap-
pellate board has been afforded no opportunity to pass.

(5) An agency, on its own initiative, may review in whole or in
part, at such time and in such manner as it shall determine, any
order, decision, report, or other action made or taken by an inter-
mediate appellate board.,

(6) If an agency grants an application for review or under-
takes review on its own motion, it may affirm, modify, reverse,
or set aside the order, decision, report or other action of the
intermediate appellate board, or may remand the proceeding for
reconsideration.

(7) The filing of an application for agency review shall be a
condition precedent to judicial review of any order of an inter-
mediate appellate board.

(8) Agency employees performing review functions shall not
be responsible to or subject to the supervision or direction of

22 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES

any employee or agent engaged in the performance of investiga-
tive or prosecuting functions for any agency.

(b) Discretionary revieiv of decisions of presiding officers

(1) When a party to a proceeding seeks administrative revievv^
of an initial decision rendered bj?^ the presiding officer (or other
officer authorized by law to make such decision), the agency may
accord administrative finality to the initial decision by denying
the petition for its review, or by summarily affirming the initial
decision, unless the party seeking review makes a reasonable
showing that:

(a) A prejudicial procedural error was committed in the
conduct of the proceeding, or

(b) The initial decision embodies (i) a finding or con-
clusion of material fact which is erroneous or clearly er-
roneous, as the agency may by rule provide; (ii) a legal
conclusion which is erroneous; or (iii) an exercise of dis-
cretion or decision of law or policy which is important and
which the agency should review.

(2) The agency's decision to accord or not to accord admin-
istrative finality to an initial decision shall not be subject to
judicial review. If the initial decision becomes the decision of
the agency, however, because it is summarily affirmed by the
agency or because the petition for its review is denied, such
decision of the agency will be subject to judicial review in ac-
cordance with established law.

RECOMMENDATION NO. 7

ELIMINATION OF JURISDICTIONAL AMOUNT
REQUIREMENT IN JUDICIAL REVIEW

RECOMMENDATION

Title 28 of the United States Code should be amended to elim-
inate any requirement of a minimum jurisdictional amount be-
fore U.S. district courts may exercise original jurisdiction over
any action in which the plaintiff alleges that he has been injured
or threatened with injury by an officer or employee of the United
States or any agency thereof, acting under color of Federal law.
This amendment is not to affect other limitations on the avail-
ability or scope of judicial review of Federal administrative
action.

OFFICIAL RECOMMENDATIONS 23

RECOMMENDATION NO. 8

JUDICIAL REVIEW OF INTERSTATE COMMERCE
COMMISSION ORDERS

RECOMMENDATION

Judicial review of orders of the Interstate Commerce Com-
mission in cases where at present a special three-judge District
court is used under 28 U.S.C. 2325 should be by petition to review
in the U.S. Courts of Appeals in the same general manner as
review of agency orders under the Judicial Review Act of 1950,
28 U.S.C. (Supp. II, 1967) 2341-2352.

RECOMMENDATION NO. 9

STATUTORY REFORM OF THE SOVEREIGN
IMMUNITY DOCTRINE'

The technical legal defense of sovereign immunity, which the
Government may still use in some instances to block suits against
it by its citizens regardless of the merit of their claims, has
become in large measure unacceptable. Many years ago the United
States by statute accepted legal responsibility for contractual
liability and for various types of misconduct by its employees.
The "doctrine of sovereign immunity" should be similarly limited
where it blocks the right of citizens to challenge in courts the
legality of acts of governmental administrators. To this end the
Administrative Procedure Act should be amended.

RECOMMENDATION

1. Section 702 of title 5, United States Code (formerly section
10(a) of the Administrative Procedure Act), should be amended
by adding the following at the end of the section :

^ Recommendations Nos. 9-17 were adopted October 21-22, 1969.

24 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES

view or the power or duty of the court to dismiss any action or deny
relief on any other appropriate legal or equitable ground; or (2) confers
authority to grant relief if any other statute that grants consent to suit
expressly or impliedly forbids the relief which is sought.

2. Section 703 of title 5, United States Code (formerly section
10(b) of the Administrative Procedure Act), should be amended
by adding the following sentence after the first full sentence:

If no special statutory review proceeding is applicable, the action for
judicial review may be brought against the United States, the agency by
its official title, or the appropriate officer.

RECOMMENDATION NO. 10

JUDICIAL ENFORCEMENT OF ORDERS OF THE
NATIONAL LABOR RELATIONS BOARD

RECOMMENDATION

The orders of most major independent regulatory agencies
normally become enforceable automatically unless challenged m
court. The statutory requirement that an order of the NLRB
can be made effective only by affirmative action to obtain judicial
confirmation of its terms, even when its validity is wholly un-
contested, is contrary to efficient law enforcement. The Adminis-
trative Conference of 1961-62 urged that NLRB orders be
treated, for purposes of judicial review, like those of the other
major independent administrative agencies. That recommenda-
tion remains as sound today as when it was first made. The
present practice burdens the courts with unnecessary proceedings
whose only product is delay rather than added protection against
ill-founded action. In the absence of any challenge after due
notice to the parties, NLRB orders should be enforceable by the
U.S. Courts of Appeals without further intermediate steps.

RECOMMENDATION NO. 11

PUBLICATION OF A "GUIDE TO FEDERAL
REPORTING REQUIREMENTS"

Popular demand for the official index digest entitled "Guide to
Record Retention Requirements" indicates that a companion piece
covering the matter of Federal reporting requirements would
serve a public need.

OFFICIAL RECOMMENDATIONS 25

RECOMMENDATION

1. Each agency subject to chapter 35, title 44, United States
Code, entitled "Coordination of Federal Reporting Services,"
should make separate digests of and citations to each statutory-
provision and each regulatory provision relied upon by the agency
for the solicitation of information as contemplated by chapter 35.

2. After consultation with the Bureau of the Budget, the Di-
rector of the Federal Register should prescribe the style, cover-
age, and submission of such digests, and should publish the over-
all "Guide to Federal Reporting Requirements" in the Federal
Register in the same manner used for the publication of the
"Guide to Record Retention Requirements."

RECOMMENDATION NO. 12

ANALYTICAL SUBJECT-INDEXES TO SELECTED
VOLUMES OF THE CODE OF FEDERAL REGULATIONS

Currently the Code of Federal Regulations is updated annually
by the issuance of some 112 revised books. Many of these books are
self-indexing. The usefulness of some books may be greatly im-
paired by the lack of an analytical subject index.

RECOMMENDATION

1. Each agency contributing substantially to the CFR should
review its materials and (a) determine what books should include
an analytical subject index, and (b) arrange for the preparation
and publication of requisite indexes.,

2. The Office of the Federal Register should review proffered
indexes and arrange for the publication of those that appear to
be professionally adequate.

RECOMMENDATION NO. 13

ELIMINATION OF DUPLICATIVE HEARINGS IN FAA
SAFETY DE-CERTIFICATION CASES

RECOMMENDATION

The Federal Aviation Administrator has authority to revoke or
suspend the licenses of aviation personnel and training facilities,

26 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES

airworthiness certificates, and other permits related to the opera-
tion of aircraft. Present procedures contemplate a full trial-type
hearing, if one is desired by the respondent, before the Admin-
istrator issues an order of suspension or revocation. If an appeal
is taken from that order, a second full hearing is afforded by the
National Transportation Safety Board. This is wasteful of time
and personnel, and is unnecessary as a protection of affected
parties.

In order to expedite proceedings bearing directly on public
safety, without sacrificing the interests of individual respondents,
the Federal Aviation Administrator should discontinue providing
hearings in the nature of trials in "certificate actions." This will
not result in "punishment before trial," since the effective date of
a certificate action order is invariably postponed, except in emer-
gency situations, pending the outcome of proceedings before the
National Transportation Safety Board.

RECOMMENDATION NO. 14

COMPILATION OF STATISTICS ON ADMINISTRATIVE
PROCEEDINGS BY FEDERAL DEPARTMENTS AND
AGENCIES

Government agencies which conduct formal or informal rule-
making proceedings or cases of adjudication which directly fix
the rights and obligations of private persons (hereafter referred
to as "proceedings")'^ owe a special duty to the individuals
affected and to the general public to manage their caseloads as
efficiently as possible, to eliminate inordinate delays in the con-
duct of proceedings, and to work continuously toward improving
the fairness, effectiveness, and economy of their procedures. The
present volume of Federal administrative proceedings is so great
that much of the basic information needed in these efforts can be
developed in intelligible and useful form only through statistical
study. The compilation and publication of comprehensive sta-
tistics on Federal agency proceedings, at regular intervals would :
— Provide each agency with information concerning its

business which would enable it to manage its caseload

more effectively.

' The agency compilations proposed by this recommendation should not be limited to formal [

proceedings, or indeed to "proceedings" as that term has been employed in gathering statis- '
tics for past conferences or Congressional groups. Rather, agency figures should report all

matters directly fixing the rights, privileges, and obligations of private interests, including ..

the routine handling of applications and claims. l]

OFFICIAL RECOMMENDATIONS 27

— Augment generally the information concerning its ac-
tivities which each agency must furnish to the President,
the Congress, and the public,

— Afford affected parties and their counsel a better under-
standing of the administrative processes which determine
their rights and obligations, and

— Provide a basis for specific study of particular agency pro-
cedures by the agency itself, by committees of Congress,
the Administrative Conference of the United States, the
organized bar, research scholars, and other individuals
and organizations, public and private, interested in im-
proving the Federal administrative process.

RECOMMENDATION

1. To the extent deemed useful to advance the purposes of this
recommendation, each Federal administrative agency which con-
ducts proceedings (as defined above) affecting private persons'
rights, privileges or obligations, should prepare annual statisti-
cal data pertaining to those proceedings, to be compiled in such
manner and presented in such publications as the agency con-
siders appropriate.

2. These statistical compilations should list the kinds of pro-
ceedings pending during the year, with a concise yet meaningful
description of the nature and purpose of each kind of proceeding
and citations for the statutory authority under which the pro-
ceedings are conducted, and the sections of the Code of Federal
Regulations which set forth the rules of practice governing each
kind of proceeding.

3. For the purpose of agency efforts that may be made in
cooperation with the Chairman of the Administrative Conference
of the United States, to lessen delays in administrative proceed-
ings, the statistical compilation should show the number of days
which elapsed during each significant step of the proceedings
which were concluded during the year.

4. In designing each agency's compilation, the following in-
formation, together with the time-study data referred to in 3
above, should be considered minimal:

(a) The number of proceedings of each kind pending at
the beginning of the year ;

(b) The number of new proceedings filed or otherwise
commenced during the year;

28 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES

dismissal on procedural grounds, decision on the merits
without hearing, final decision by agency after hearing, and
an examiner's initial decision, etc.) ;

(d) The number of proceedings remaining at the end of
the year ; and

(e) The number of proceedings concluded during the year
which were appealed to the courts.

5. Each agency should periodically analyze all of the informa-
tion thus compiled and should develop improved techniques fitted
to its particular needs to reduce delays and expense and other-
wise to improve its administrative processes. A copy of this
analysis should be submitted to the Administrative Conference
of the United States.

6. In presenting its statistical compilation, each agency should
summarize this analysis and describe the specific steps it has
taken toward the ends referred to in 5 above.

7. Each agency, in its subsequent compilations, should follow
a pattern that makes possible a comparison of data with corre-
sponding data for earlier periods, thus reflecting changes in back-
logs, volumes, and elapsed times and providing a measure of the
agency's experience following the specific actions referred to in
6 above.

RECOMMENDATION NO. 15

CONSIDERATION OF ALTERNATIVES IN LICENSING
PROCEDURES

Court decisions, notably Scenic Hudson Preservation Confer-
ence V. FPC ° have emphasized that in licensing cases the Federal
Power Commission must explore and give proper consideration
to possible alternatives to the specific plan proposed by the ap-
plicant. This principle may in the future be applied to other
licensing agencies. Since the range of possible alternatives in any
case can be extensive and in some cases virtually unbounded,
ways must be sought to control the scope and duration of licens-
ing proceedings within manageable limits while meeting the
requirements of the law.

RECOMMENDATION

Each agency which issues licenses, permits, or other forms of
authorization, should seek to create procedures fitting its partic-

«354 F. 2d 608 (2d Cir. 1965), cert, denied. 384 U.S. 941 (1966). See also Udall v. FPC,
387 U.S. 428 (1967).

OFFICIAL RECOMMENDATIONS 29

ular circumstances which will assure appropriate consideration
of alternatives where necessary, and at the same time will per-
mit effective administration of that agency's licensing functions.
Because the various agencies must deal in their licensing pro-
cedures with many diverse subject matters, the Administrative
Conference cannot specify a single rule and procedure for achiev-
ing this objective. Procedural techniques which experience has
shown useful in analogous situations and which an agency might
consider include: (1) Guidelines embodying a rule of reason
concerning the number and character of alternatives to be con-
sidered in particular types of cases; (2) rules providing a point
in time beyond which the issues in a proceeding will not be
expanded to include additional alternatives except under com-
pelling circumstances; (3) techniques, such as prehearing con-
ferences and the filing of testimony in written form before trial,
which tend to promote early identification of interested parties
and important alternatives; and (4) placing responsibility upon
the party or other person proposing an alternative to the ap-
plicant's proposal to make an appropriate threshold showing that
the alternative deserves the agency's consideration.

RECOMMENDATION N0.W6*f-S

ELIMINATION OF CERTAIN EXEMPTIONS FROM THE
APA RULEMAKING REQUIREMENTS

RECOMMENDATION

In order to assure that Federal agencies will have the benefit of
the information and opinion that can be supplied by persons
whom regulations will aflfect, the Administrative Procedure Act
requires that the public must have opportunity to participate in
rulemaking proceedings. The procedures to assure this oppor-
tunity are not required by law, however, when rules are pro-
mulgated in relation to "public property, loans, grants, benefits,
or contracts." These types of rules may nevertheless bear heavily
upon nongovernmental interests. Exempting them from generally
applicable procedural requirements is unwise. The present law
should therefore be amended to discontinue the exemptions to
strengthen procedures that will make for fair, informed exercise
of rulemaking authority in these as in other areas.

Removing these statutory exemptions would not diminish the
power of the agencies to omit the prescribed rulemaking pro-

30 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES

cedures whenever their observances were found to be impracti-
cable, unnecessary, or contrary to the public interest. A finding to
that effect can be made, and published in the Federal Register,
as to an entire subject matter concerning which rules may be
promulgated. Each finding of this type should be no broader
than essential and should include a statement of underlying
reasons rather than a merely conclusory recital.

Wholly without statutory amendment, agencies already have
the authority to utilize the generally applicable procedural meth-
ods even when formulating rules of the exempt types now under
discussion. They are urged to utilize their existing powers to
employ the rulemaking procedures provided by the Administra-
tive Procedure Act, whenever appropriate, without awaiting a
legislative command to do so.

RECOMMENDATION NO. 17

RECRUITMENT AND SELECTION OF HEARING EXAMIN-
ERS; CONTINUING TRAINING FOR GOVERNMENT
ATTORNEYS AND HEARING EXAMINERS; CREATION
OF A CENTER FOR CONTINUING LEGAL EDUCATION
IN GOVERNMENT

RECOMMENDATION
A. RECRUITMENT AND SELECTION OF HEARING EXAMINERS

1. The Civil Service Commission should enlarge the base of
recruitment and the number of qualified candidates available
for appointment to hearing examiner positions by recognizing
trial experience as one basis for qualification.

2. The Civil Service Commission should depart experimentally
from the selective certification system as now practiced in the
appointment of hearing examiners. Instead, it should develop a
system under which the number of candidates qualified for hear-
ing examiner positions is enlarged through the use of a general
register for all agencies, with additional credit for specific rele-
vant professional experience or selective certification for those
agencies which demonstrate to the Civil Service Commission's
satisfaction a current need for personnel possessing a specific
background. The purpose, of this experiment should be to permit
meaningful comparative evaluation with the system now in effect.

OFFICIAL RECOMMENDATIONS 31

A report should be made to the Administrative Conference after
3 years ot experience.

To aid the Civil Service Commission in effectuating the ob-
jective of this part of the recommendation, the Chairman of the
Administrative Conference should appoint special committees
from time to time to evaluate the standards of specific relevant
professional experience proposed to the Civil Service Commission
by any agency as being required for its v^ork. Present selective
certification agreements should continue until new standards
have been adopted by the Civil Service Commission.

3. The Civil Service Commission should study and, if practi-
cable, should institute an experimental intern program to supple-
ment the direct appointment of hearing examiners from the
register. Without finally deciding the issue, the Conference urges
the Commission to consider anev;^ whether successful interns
should automatically be placed in hearing examiner positions.

4. The Veterans Preference Act should be amended to permit
the selection of examiners for each vacancy from the top 10
available persons then appearing on the register, determined on
the basis of examination and ranking without reference to
veterans preference.

B. Continuing Training for Government Attorneys
AND Examiners

1. Agencies employing attorneys and hearing examiners should
encourage their participation in programs of continuing legal
education. Budgets should include adequate funds for personnel
so that attorneys and examiners may be released for reasonable
periods of time to accomplish added training. Agencies should
take all suitable steps to assure wide knowledge of training
opportunities.

2. Agencies should also explore ways in which they can sup-
port the professional training activities of the Federal Trial
Examiners Conference, bar associations, foundations, the Civil
Service Commission, law schools, the individual agencies with
parallel legal interests, and other institutions offering appropriate
training for attorneys and examiners.

3. The feasibility of short-term exchange assignments of ex-
perienced attorneys in higher grades among agencies should be
considered, in order to enhance the insight and effectiveness of
government lawyers by exposing them to varied aspects of legal
problems with which they may deal.

32 administrative conference of the united states

c. creation of a center for continuing legal
Education in Government

1. A center should be established in the Washington area for
the continuing- legal education of Government lawyers, hearing
examiners, and private attorneys practicing before Government
agencies. The center should also promote coordinated programs
within the Government and with specialized segments of the
organized bar; stimulate and engage in the preparation of man-
uals, research materials, and other publications in support of
such continuing legal education; and provide a mechanism for
the exchange of information concerning professional problems
of Government attorneys. The center, under the direction of
lawyers, should be oriented toward applied legal problems. The
Civil Service Commission should make available to it the benefit
of the Commission's experience in establishing and operating
Federal Executive institutes and centers. The Federal Adminis-
trative Justice Center proposed by the American Bar Association
in a resolution adopted by the American Bar Association's House
of Delegates in January 1969, as an example, would serve the
purpose of the present recommendation.

2. The establishment of the Center should not diminish each
agency's present responsibility to provide continuing legal educa-
tion for its own lawyers through "in-house" training programs,
but the Center should support and assist all agencies in main-
taining these programs at a high level of effectiveness.

RECOMMENDATION NO. 18
PARTIES DEFENDANT^

The size and complexity of the Federal Government, coupled
with the intricate and technical law concerning official capacity
and parties defendant, have given rise to innumerable cases in
which a plaintiff's claim has been dismissed because the United
States or one of its agencies or officers lacked capacity to be
sued, was improperly identified, or could not be joined as a
defendant. The ends of justice are not served when dismissal
on these technical grounds prevents a determination on the merits
of what may be just claims. Three attempts to cure the de-
ficiencies of the law of parties defendant have achieved only
partial success and further changes are required to eliminate

' Recommendations Nos. 18-22 were adopted June 2-3, 1970.

OFFICIAL RECOMMENDATIONS 33

remaining technicalities concerning the identification, naming,
capacity, and joinder of parties defendant in actions challenging
federal administrative action.

RECOMMENDATION

1. The Federal Rules of Civil Procedure contain liberal pro-
visions for substitution of parties and for amendment of plead-
ings and correction of defects as to parties defendant. The
Department of Justice should instruct its lawyers and United
States Attorneys to call the attention of the court to these pro-
visions in cases involving technical defects with respect to the
naming of parties defendant in any situation in which the plain-
tiff's complaint provides fair notice of the nature of the claim
and the summons and complaint were properly served on a
United States Attorney, the Attorney General, or an officer or
agency which would have been a proper party if named. The
Department of Justice should be responsible for determining
who within our complex federal establishment is responsible for
the alleged wrong and should take the initiative in seeking cor-
rection of pleadings or adding of proper parties. Since the De-
partment of Justice has acquiesced in the substance of this
recommendation, it would also be appropriate for the Department
of Justice and the Administrative Conference of the United
States to seek an amendment of the Federal Rules of Civil Pro-
cedure to provide that the Attorney General shall have the
responsibility to correct such deficiencies.

2. Congress should enact legislation:,

(a) Amending section 703 of title 5 to allow the plaintiff
to name as defendant in judicial review proceedings the
United States, the agency by its official title, the appropriate
officer, or any combination of them.

(b) Amending section 1391 (e) of title 28 to include within
its coverage actions challenging federal administrative action
in which the United States is named as a party defendant,
without affecting special venue provisions which govern other
types of actions against the United States.

(c) Amending section 1391(e) of title 28 to allow a plain-
tiff to utilize that section's broadened venue and extraterri-
torial service of process in actions in which non-federal de-
fendants who can be served in accordance with the normal
rules governing service of process are joined with federal
defendants.

34 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES

RECOMMENDATION NO. 19

SEC NO-ACTION LETTERS UNDER SECTION 4 OF THE
SECURITIES ACT OF 1933

The following recommendations concern the process by which
the Division of Corporation Finance of the Securities and Ex-
change Commission (the "Division") advises stockholders
whether proposed sales of unregistered stock might involve a
violation of the Securities Act of 1933 for which the Division
would recommend Commission enforcement action. This no-
action process is an outstanding example of administrative ac-
cessibility and pragmatism, enabling stockholders readily to
determine whether a contemplated sales transaction may be
consummated without registration. The recommendations are
intended to enable the public and individual stockholders to be
more fully advised of the interpretations, policies and precedents
which guide the conclusions of the Commission and the staff,
and to encourage the Commission to relieve its staff of the
burden of routine no-action requests.,

RECOMMENDATION

1. Rule-Making. The Commission acting under 5 U.S.C. § 553,
should to the maximum feasible extent state in the form of rules
the legal interpretations, the policies, and the standards guiding
discretion which it and the Division staff apply in determining
registration obligations in the no-action process. Where general-
ized rules are not feasible, the Commission should consider
making rules limited to illustrative cases (involving either real
or hypothetical facts) with an explanation of the reasons for
their disposition. Existing summaries of past no-action letters,
minutes of the Commission's disposition of those no-action re-
quests which are brought before it, and related memoranda,
insofar as they reflect current interpretative positions, should
afford a strong and readily available foundation for such rule-
making.

2. Interpretative Releases. Where the formal rulemaking rec-
ommended above may not be feasible, the Commission should
to the maximum extent feasible make publicly available by the
means of public releases its legal interpretations and policies,
and standards guiding discretionary determinations.

3. Past Interpretations. On questions of law or policy which
are not answered in formal rules or releases, a selected group
of the more important past no-action letters which may have

OFFICIAL RECOMMENDATIONS 35

continuing significance should be summarized and made publicly
available.

4. Routine Inquiries. As the Commission's rules, releases and
particular interpretations become publicly available, the Com-
mission should consider instructing its staff to discontinue giving
no-action letters on routine questions adequately answered by
publicly available material.

5. Future No-Action Letters. The Commission and its staff
should continue to issue no-action letters not excluded as routine
under the limitation, suggested in .No. 4. Each non-routine letter
should, in detail or in summary form as deemed appropriate,
state the facts and the reasons for the conclusion. Each letter
should be made publicly available, subject to safeguards deemed
appropriate under No. 6.

6. Confidentiality and Time of Publication. The Commission
in making no-action letters publicly available should protect con-
fidential information by the most effective and feasible means,
including deletion, preparation of a "public" version of the letter,
or reasonable delay in making the letter public. However, those
letters which reflect significant developments in legal interpreta-
tion, policy or standards guiding discretion, should be published
promptly, subject to the necessary protection of confidentiality.

7. Procedural Regulations. The present procedural regulations
do not fully describe the no-action process and should be ex-
panded to cover each step of the process.

Separate statemeyit of Malcolm S. Mason.

Government needs the art of making practical compromises
between conflicting goals. There is a regrettable tendency to hold
up administrative agencies to Olympian standards based on a
theoretical pure strategy when a mixed strategy is called for.
This operates to defeat the purpose of administrative procedure
and the values to the public of administrative action. The Con-
ference is hurrying too fast the process towards formalism
which destroys both effectiveness and fairness. Every generation
needs not only a measure of rational consistency but also the
principle of Equity that stare decisis kills.

The Securities and Exchange Commission no-action ietter is
an outstanding creation in the field of administrative procedure
by an agency that has been outstanding in its efforts to com-
municate its views to the public affected. The Conference believes
that the Commission can do better and I agree it can, but the
conference has proposed a solution which in my view makes
sure that it will do worse.

36 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES

The recommendation of the Conference if carried out will
destroy the no-action letter for the valuable purpose for which
it was created: quick, helpful, trustworthy guidance. If advice
on particular matters must be accompanied by a public state-
ment containing facts and reasons (as required by the Conference
Recommendation, paragraph 5) and will be used as precedent,
cautious statement and careful qualification is needed. The re-
sult will be that the staff will no longer dare to give the quick
and informal advice and assurance that they are now authorized
to give. The people who need the assistance will no longer get it.
A new piece of bureaucratic red tape will be created. An ex-
isting effective and valuable informal procedure will be hurt.
None of those who supported the recommendation intended this,
but it will be the result. The Conference Recommendation does
not reflect realistic consideration of how the no-action letter has
operated in the past and how it will be likely to operate in the
future.

RECOMMENDATION NO. 20
SUMMARY DECISION IN AGENCY ADJUDICATION

Delays in the administrative process can be avoided by elimi-
nating unnecessary evidentiary hearings where no genuine issue
of material fact exists. Each agency having a substantial case-
load of formal adjudications should adopt procedures providing
for summary judgment or decision, patterned after the follow-
ing model rule in suitable cases and with appropriate modifica-
tions to meet the needs of its own hearings:

RECOMMENDATION

§ 1. Any party to an adjudicatory or rulemaking proceeding
required by statute to be determined on the record after op-
portunity for agency hearing may, after commencement of the

proceeding and at least days before the date fixed for the

hearing, move with or without supporting affidavits for a sum-
mary decision in his favor of all or any part of the proceeding.

Any other party may, within days after service of the

motion, serve opposing affidavits or countermove for summary
decision. The presiding officer may, in his discretion, set the
matter for argument and call for the submission of briefs.

§ 2. The presiding officer may grant such motion if the plead-
ings, affidavits, material obtained by discovery or otherwise, or

OFFICIAL RECOMMENDATIONS 37

matters officially noticed, show that there is no genuine issue as
to any material fact and that a party is entitled to summary
decision.

§ 3. Affidavits shall set forth such facts as would be admissible
in evidence and shall show affirmatively that the affiant is com-
petent to testify to the matters stated therein. When a motion
for summary decision is made and supported as provided in this
rule, a party opposing the motion may not rest upon the mere
allegations or denials of his pleading; his response, by affidavits
or as otherwise provided in this rule, must set forth specific
facts showing that there is a genuine issue of fact for the hearing.

§ 4. Should it appear from the affidavits of a party opposing the
motion that he cannot for reasons stated present by affidavit
facts essential to justify his opposition, the presiding officer may
deny the motion for summary decision or may order a continu-
ance to permit affidavits to be obtained or discovery to be had or
may make such other order as is just.

§ 5. The denial of all or any part of a motion for summary
decision by the presiding officer shall not be subject to inter-
locutory appeal to the (review authority) unless (a) the pre-
siding officer certifies in writing (i) that the ruling involves an
important question of law or policy as to which there is substantial
ground for difference of opinion and (ii) that an immediate
appeal from the ruling may materially advance the ultimate
termination of the litigation; or (b) if the presiding officer de-
clines so to certify, a designee of the (review authority) so
certifies upon appropriate application. The allowance of such an
interlocutory appeal shall not stay the proceeding before the
presiding officer unless the (review authority) shall so order.

RECOMMENDATION NO. 21
DISCOVERY IN AGENCY ADJUDICATION

Prehearing discovery in agency adjudication insures that the
parties to the proceeding have access to all relevant, unprivileged
information prior to the hearing. Its primary objectives include
the more expeditious conduct of the hearing itself, the encour-
agement of settlement between the parties, and greater fairness
in adjudication. Agencies that conduct adjudicatory proceedings
generally enjoy broad investigatory powers, and fairness requires
that private parties have equal access to all relevant, unprivi-
leged information at some point prior to the hearing.

38 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES

RECOMMENDATION

It is therefore recommended that each agency recognize the
following minimum standards for discovery in adjudicatory pro-
ceedings subject to sections 5, 7 and 8 of the Administrative
Procedure Act, nov^ codified as 5 U.S.C. 554, 556 and 557. In-
dividual agencies may permit additional discovery where appro-
priate and may tailor the recommended standards to meet the
needs of particular types of proceedings where special or less
elaborate discovery procedures will accomplish the same basic
objectives or where the protective measures here recommended
will be inadequate to achieve the ends sought. Each agency
should undertake to train its hearing examiners in the applica-
tion of the rules it promulgates to implement these standards.
This training should draw upon the experience of other agencies,
the Federal Courts, private practitioners, and bar associations.

The recommended minimum standards include the following
procedures :

1. Prehearing Conferences

The presiding officer should have the authority to hold one or
more prehearing conferences during the course of the proceeding
on his own motion or at the request of a party to the proceeding.
The presiding officer should normally hold at least one prehear-
ing conference in proceedings where the issues are complex or
where it appears likely that the hearing will last a considerable
period of time. The presiding officer at a prehearing conference
should have the authority to direct the parties to exchange their
evidentiary exhibits and witness lists prior to the hearing. Where
good cause exists, the parties should have the right at any time
to amend, by deletion or supplementation, their evidentiary ex-
hibits and witness lists.

2. Depositions

A party to the proceeding should be able to take depositions
of witnesses upon oral examination or written questions for pur-
poses of discovering relevant, unprivileged information, subject
to the following conditions:

(1) the taking of depositions should normally be deferred
until there has been at least one prehearing conference;

(2) the party seeking to take a deposition should apply
to the presiding officer for an order to do so ;,

(3) the party seeking to take a deposition should serve
copies of the application on the other party or parties to

OFFICIAL RECOMMENDATIONS 39

the proceeding, who should be given an opportunity, along
with the deponent, to notify the presiding officer of any
objections to the taking of the deposition ;

(4) the presiding officer should not grant an application
to take a deposition if he finds that the taking of the dep-
osition would result in undue delay ;

(5) the presiding officer should otherwise grant an ap-
plication to take a deposition unless he finds that there is
not good cause for doing so ; and

(6) the deposing of an agency employee should only be
allowed upon an order of the presiding officer based on a
specific finding that the party applying to take the deposi-
tion is seeking significant, unprivileged information not dis-
coverable by alternative means. Any such order should be
subject to an interlocutory appeal to the agency.

An order to take a deposition should be enforceable through
the issuance of a subpoena ad testificandum.

3. Witnesses

(a) Pri07' Statements — At the prehearing conference or at
some other reasonable time prior to the hearing the attorney or
employee appearing on behalf of the agency in the proceeding
should make available to the other parties to the proceeding any
prior statements of agency witnesses which are in the possession
of the agency or obtainable by it from any other Federal agency
and which relate to the subject matter of the expected testi-
mony. "Statement" is defined to include only a written state-
ment signed or adopted by the witness or a recording or tran-
scription which is a substantially verbatim recital of an oral
statement made by the witness to an agent of the Federal
government.

(b) Narrative Summaries of Expected Testimony — At the
prehearing conference or at some other reasonable time prior to
the hearing each party to the proceeding should make available
to the other parties to the proceeding the names of the witnesses
he expects to call and a narrative summary of their expected
testimony. The attorney or employee appearing on behalf of the
agency in the proceeding should have the authority to designate
any prior statement or statements of an agency witness which
he makes available to the other parties under Recommendation
3(a) as all or part of the narrative summary of that witness'
expected testimony. Where good cause exists, the parties should
have the right at any time to amend, by deletion or supplementa-
tion, the list of names of the witnesses they plan to call and the

40 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES

narrative summaries of the expected testimony of those
witnesses,

4. Written Interrogatories to Parties

(a) AvailaUlity—A party to the proceeding should be able
to serve written interrogatories upon any other party for pur-
poses of discovering relevant, unprivileged information. A party
served with interrogatories should be able, before he must answer
the interrogatories, to apply to the presiding officer for the hold-
ing of a prehearing conference for the mutual exchange of evi-
dentiary exhibits and other information. Each interrogatory
which requests information not previously supplied at a pre-
hearing conference should be answered separately and fully in
writing under oath, unless it is objected to, in which event the
reasons for the objection should be stated in lieu of answer.
The party upon whom the interrogatories have been served should
serve a copy of the answers and objections within a reasonable
time upon the party submitting the interrogatories. The party
submitting the interrogatories may move the presiding officer for
an order compelling an answer to an interrogatory or interroga-
tories to which there has been an objection or other failure to
answer.

(b) Interrogatories Directed to the Agency — Each agency
should designate an appropriate official on whom other parties
to the proceeding may serve written interrogatories directed to
the agency. That official should arrange for agency personnel
with knowledge of the facts to answer and sign the interrogatories
on behalf of the agency. The attorney or employee appearing
on behalf of the agency in the proceeding should have the authority
to make and sign objections to interrogatories served upon the
agency. Interrogatories directed to the agency which seek in-
formation available only from the agency head, member, or mem-
bers should only be allowed upon an order of the agency based
on a specific finding that the interrogating party is seeking sig-
nificant, unprivileged information not discoverable by alterna-
tive means.

5. Requests for Admissions

(a) Availability — A party to the proceeding should be able
to serve upon any other party a written request for the admis-
sion, for purposes of the pending proceeding, of any relevant,
unprivileged facts, including the genuineness of any document
described in the request,

(b) Requests Directed to the Agency — Each agency should des-

OFFICIAL RECOMMENDATIONS 41

ignate an appropriate official on whom other parties to the pro-
ceeding may serve requests for admissions directed to the agency.
That official should arrange for agency personnel with knowl-
edge of the facts to respond to the requests on behalf of the
agency. The attorney or employee appearing on behalf of the
agency in the proceeding should have the authority to make and
sign objections to requests for admissions served upon the agency.
Requests directed to the agency which seek admissions obtain-
able only from the agency head, member or members should
only be allowed upon an order of the agency based on a specific
finding that the requesting party is seeking significant, unpriv-
ileged information not discoverable by alternative means.

6. Production of Documents and Tangible Things

(a) From Non-Parties — A party to the proceeding should be
able to obtain in accordance with agency rules a subpoena duces
tecum requiring a non-party to produce relevant designated docu-
ments and tangible things, not privileged, at a prehearing con-
ference, at the taking of the non-party's deposition, or at any
other specific time and place designated by the issuing officer.

(b) From Parties — A party to the proceeding should be able
to apply to the presiding officer for an order requiring any other
party to produce and to make available for inspection, copying
or photographing, at a prehearing conference or other specific
time and place, any designated documents and tangible things,
not privileged, which constitute or contain relevant evidence. The
party seeking production should serve copies of the application on
the other party or parties to the proceeding, who should be given
an opportunity to notify the presiding officer of any objections.
The presiding officer should order the production of such desig-
nated documents and tangible things unless he finds that there
is not good cause for doing so.

6, the agency conducting the proceeding should be considered a
party to the proceeding whether or not the agency staff partici-
pates as a party to the proceeding.

7. Role of the Presiding Officer

(a) Control over Discovery — The presiding officer should have
the authority to impose schedules on the parties to the proceed-
ing specifying the periods of time during which the parties may
pursue each means of discovery available to them under the rules
of the agency. Such schedules and time periods should be set

42 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES

with a view to accelerating disposition of the case to the fullest
extent consistent with fairness.

(b) Interlocutory Appeals — Except as provided by Recom-
mendation 2(6) above, an interlocutory appeal from a ruling
of the presiding officer on discovery should be allowed only upon
certification by the presiding officer that the ruling involves an
important question of law or policy which should be resolved at
that time by the appropriate review authority. Notwithstanding
the presiding officer's certification, the review authority should
have the authority to dismiss summarily the interlocutory appeal
if it should appear that the certification was improvident. An
interlocutory appeal should not result in a stay of the proceed-
ings except in extraordinary circumstances.

8. Protective Orders

(a) Authority of Presiding Officer in General — The presiding
officer should have the authority, upon motion by a party or by
the person from whom discovery is sought, and for good cause
shown, to make any order which justice requires to protect a
party or person from annoyance, embarrassment, oppression, or
undue burden or expense, including one or more of the following:
(1) that the discovery not be had; (2) that the discovery may
be had only on specified terms and conditions, including a desig-
nation of the time or place; (3) that the discovery may be had
only by a method of discovery other than that selected by the
party seeking discovery; (4) that certain matters not be in-
quired into, or that the scope of the discovery be limited to cer-
tain matters; (5) that discovery be conducted with no one pres-
ent except persons designated by the presiding officer; (6) that
a deposition after being sealed be opened only by order of the
presiding officer; (7) that a trade secret or other confidential
research, development, or commercial information not be dis-
closed or be disclosed only in a designated way; (8) that the
parties simultaneously file specified documents or information
enclosed in sealed envelopes to be opened as directed by the pre-
siding officer.

(b) Names of Witnesses — The presiding officer should have the
authority upon motion by a party or other person, and for good
cause shown, by order (a) to restrict or defer disclosure by a
party of the name of a witness, a narrative summary of the ex-
pected testimony of a witness or, in the case of an agency witness,
any prior statement of the witness, and (b) to prescribe other
appropriate measures to protect a witness. Any party aff'ected by
any such action should have an adequate opportunity, once he

OFFICIAL RECOMMENDATIONS 43

learns the name of a witness and obtains the narrative summary
of his expected testimony or, in the case of an agency witness, his
prior statement or statements, to prepare for cross-examination
and for the presentation of his case.

(c) In Camera Proceedings— The presiding officer should have
the authority to permit a party or person seeking a protective
order to make all of part of the showing of good cause in camera.
A record should be made of such in camera proceedings. If the
presiding officer enters a protective order following a showing in
camera, the record of such showing should be sealed and pre-
served and made available to the agency or court in the event
of an appeal.

9. Subpoenas

The presiding officer should have the power to issue subpoenas
ad testificandum and duces tecum at any time during the course
of the proceeding. Agencies affected by these Recommendations
that do not have the statutory authority to issue subpoenas should
seek to obtain any necessary authority from the Congress.

RECOMMENDATION NO. 22

PRACTICES AND PROCEDURES UNDER THE
RENEGOTIATION ACT OF 1951

RECOMMENDATION

1. Criteria for Determining Excessive Profits

The Renegotiation Board should publish in an appropriate
form specific information describing the manner m which it
applies each of the statutory factors. In the case of statutory
factors for which the Board applies quantitative norms, a guide
or statement specifically describing those norms should be pub-
lished. In the case of statutory factors for which quantitative
norms are not ordinarily applied, the Board should publish com-
plete descriptions of the specific matters it has taken mto account
in its application of these statutory factors and the relative im-
portance it has given to such matters. In both cases, the infor-
mation to be provided should, insofar as practicable, be cate-
gorized by industry or other relevant grouping.

44 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES

2. Summaries of Facts and Reasons; Statements of Facts and
Reasons

The Renegotiation Board should improve the caliber of the
Summary of Facts and Reasons and the Statement of Facts and
Reasons furnished to a contractor. The Summary or Statement
should contain a complete analysis and explanation of the manner
in which the Board arrived at its determination and should re-
flect the data in the Board's files upon which it has relied. This
could be readily accomplished if Summaries and Statements were
principally based upon the internal reports and memoranda con-
tained in the Board's files in each case. Information concerning
third parties which otherwise would be privileged or confidential
upon which the Board has relied in reaching a determination
should be included in a Summary or Statement of Facts and
Reasons if the information can be disclosed without impairing
its proprietary value or identifying its source.

3. Performance Reports

The Renegotiation Board should make available, upon request
of a contractor, all reports it has received from procurement
agencies and other parties relating to the contractor's perform-
ance under contracts subject to renegotiation for the fiscal year
under consideration. The Board should delete from such per-
formance reports only those parts which either: (a) have been
classified by the originating agency for reasons of national de-
fense or foreign policy; or (b) contain information pertaining
to third persons which is privileged or confidential and which
federal law prohibits from being disclosed.

TEXT OF COMMITTEE REPORTS IN SUPPORT OF

RECOMMENDATIONS NOS. 1-22 OF THE

ADMINISTRATIVE CONFERENCE OF THE UNITED STATES

RECOMMENDATION NO. 1
ADEQUATE HEARING FACILITIES

Administrative hearings of the Federal Government should be
conducted in dignified, efficient hearing rooms, appropriate as to
size, arrangement and furnishings. At the present time no central
body is responsible for providing or planning the needed facilities.
As a particular consequence, administrative hearings often have
been conducted in surroundings unsuitable to the seriousness of
these governmental proceedings. The General Services Adminis-
tration could advantageously arrange for the service and the
space needed by departments and agencies in v^^hich administra-
tive hearings occur.

RECOMMENDATION

1. The General Services Administration should develop a set of
four hearing room classifications explicitly identifying the features
required with standards meeting at least the following minimum
requirements. Such classifications should be developed in con-
junction with representatives of the agencies, the bar, and ex-
aminers. The minimum requirements should be:

Type A — A formal conference room with table space for as
many as 16 principals and additional seating for up to 20
other persons.
Type B — A small hearing room with a raised dais, a witness
box, a reporter's table, table space for as many as six
counsel, and additional seating for up to 30 others. The
design and furnishings should be appropriate to a hearing
which is judicial in nature and should include wherever
possible an auxiliary room in which counsel may confer
with their clients, witnesses may be sequestered, etc.
Type C — A large hearing room accommodating as many as
30 counsel at tables and up to 70 witnesses and spectators.
This room should have the design and furnishings which
are appropriate to formal hearings of a judicial nature.

46 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES

Type D — An auditorium suitable for hearings of general

public interest which might attract over 100 principals and

spectators.

An essential requirement of each of the four types of hearing

rooms should be a small, nearby room available to the examiner

as his office and for such other uses as he designates.

2. The General Services Administration should prepare and
maintain on a current basis an inventory which (a) identifies
available hearing facilities throughout the country, classified
under the system recommended in 1 above, including hearing
rooms permanently assigned to particular agencies as well as
courtrooms (local. State, and Federal), (b) identifies the GSA
regional offices, local building managers, and others through
whom such space can be obtained, and (c) provides information
concerning the procedures to be followed to obtain space through
the GSA for the conduct of hearings.

3. The General Services Administration should establish pro-
cedures for determining the frequency and location of adminis-
trative hearings which require facilities of each type within the
system of classification recommended above in order to determine,
by city, whether a permanent hearing room for multiagency
use can be justified. A permanent hearing room should be con-
sidered justified wherever there is a continuing need of approxi-
mately one-fourth of the available working days.

4. The General Services Administration should provide for the
administration and scheduling of permanent multiagency hear-
ing facilities under the direction of GSA's Washington head-
quarters, but subject to such decentralization as the functions of
inventorying, procuring, and planning may require.

5. The General Services Administration should establish a pro-
cedure for the systematic reporting, to the respective agency
and to GSA, of deficiencies in assigned facilities discovered by
presiding officers, and for the investigation and correction of
such deficiencies.

6. The General Services Administration should establish an
advisory committee of members of the bar and other interested
professional, associations, agency representatives, and members
of the public to facilitate the evaluation of present and future
needs and to report annually to the Administrative Conference
on its activities.

7. Permanent multiagency hearing rooms and hearing rooms
permanently assigned to individual Federal agencies should be
identified as "Federal Administrative Hearing Rooms."

REC. 1. HEARING FACILITIES 47

8. The Chairman of the Administrative Conference should en-
courage the cooperation of State and local judges in the pro-
curement of courtroom space for Federal administrative hearings.

9. The Judicial Conference of the United States should en-
courage the cooperation of Federal judges in the procurement of
courtroom space for Federal administrative hearings.

10. Federal agencies should budget funds to provide for the
payment of charges for the use of appropriate space when such
space is not available on a free basis.

11. Federal agencies which conduct administrative hearings
should designate an official to work with the General Services
Administration in the procurement and planning of hearing
facilities.

REPORT OF THE COMMITTEE ON PERSONNEL
IN SUPPORT OF RECOMMENDATION NO. 1

Prepared by
Robert E. Park
Professor of Law
George Washington University

The Committee on Personnel has been charged by the Adminis-
trative Conference of the United States with responsibility for
conducting studies to determine how the professional skills and
effectiveness of Government personnel can be enhanced.

The Committee chose as its first study the question of whether
adequate hearing room facilities are available for Federal agencies
and departments.

To determine the extent to which there is a present need for
improved facilities, the Committee has conducted two surveys
of agencies ; held an informal meeting between the General Serv-
ices Administration, the Committee, representatives of the
agencies and departments, and representatives of the various
professional and bar associations; and conducted two days of
public hearings.

Responses to the agency surveys, comments at the informal
meeting and numerous contacts with individual Examiners, law-
yers and agency officers and testimony at the hearing reveal that
for some agencies the inadequacies are chronic, disruptive and
demeaning to the authority and effectiveness of the agency.

The complaints tend to be directed toward three general prob-
lems:

(a) a scarcity in some cities of suitable spaces ;

(b) a procurement system that is unfamiliar, inefficient,
misunderstood or cumbersome to employ ; and

(c) a lack of understanding of the quasi-judicial char-
acter of many administrative proceedings and the need for
a courtroom design for adversarial proceedings.

The problem of adequacy of hearing room space tends to be a
problem of obtaining space in the field. On the whole, agencies
report that their Washington spaces are adequate to very satis-

REC. 1. HEARING FACILITIES 49

factory and, to a much lesser degree, that spaces provided for
hearings at their regional offices tend to be satisfactory. The
agencies reporting the most extensive problems are those en-
gaged in large numbers of field hearings, particularly:

Interstate Commerce Commission (FY 68) 1,693 field hearings

Department of the Interior (FY 68) -.. 1,590 field hearings

National Labor Relations Board (FY 68) 3,100 field hearings

Social Security Administration (FY 68) __. 24,700 (est.) field hearings

That the problem may be only an occasional one for agencies
normally holding their hearings in Washington or in regional
offices does not diminish the significance of the particular occasion.
The damage done to the parties and to the public interest when
a major regulatory agency such as the Federal Power Commission
is reduced to obviously inferior and makeshift facilities must
seriously concern everyone who values or must rely upon the ad-
ministrative process. That the Federal Power Commission only
held five hearings outside of Washington in Fiscal Year 1968
does not diminish the importance of those five hearings.

The problem is not limited to agencies requiring hearing space
in the smaller cities. Your committee has received complaints of
difficulties resulting from inadequate hearing rooms, occurring
within the last two years, in the following major cities: Colum-
bus, Ohio; Dallas, Texas; Birmingham, Alabama; Miami, Florida;
New Orleans, Louisiana; Seattle, Washington; Philadelphia,
Pennsylvania; Pittsburgh, Pennsylvania; Norfolk, Virginia; De-
troit, Michigan ; Cincinnati, Ohio ; and Houston, Texas.

With the construction of additional Federal office buildings,
such as new facilities in Boston, the problem has been somewhat
diminished in some cities. Approximately one quarter of the
agencies responding to the survey indicated that the availability
or the quality of space, or both, had improved perceptibly in the
last several years. But this slight improvement may soon be
overshadowed by a substantial expansion in the next few years
in the use of hearings and by the increasing size of the crops of
Examiners.

The General Services Administration, through its Planning
and Utilization Division, is exceedingly interested in facilitating
the procurement of space in Federal and non-Federal buildings
throughout the country. The regional officers and local officers
of the General Services Administration off'er the agencies the
advantage of a greater familiarity with local facilities than local
agency representatives are likely to have. It offers the total ad-
ministrative system the advantage of a single source of procure-

50 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES

ment, avoiding the harassment or confusion of local volunteers
of space by appeals from a multiplicity of agencies.

The General Services Administration has indicated its willing-
ness to provide permanent hearing room facilities in those cities
where shared use by Federal agencies and departments would
justify such assignment. The General Services Administration
has indicated, also, that it would not apply the normal utiliza-
tion minimum for justification of at least some use on at least
50% of the days, but would apply a more relaxed requirement
similar to that used to evaluate the need for courtroom facilities.
The G.S.A recognizes that the character of the use for such fa-
cilities makes constant use unlikely. For example, in its Occupancy
Guide for G.S.A officers providing space for the Interstate Com-
merce Commission, G.S.A. notes, "Whenever a continuing need
for hearing rooms approximates one-fourth of the available work-
ing days or more, a room suitable for conducting hearings should
be provided and made available to the Commission on a perma-
nent basis."

The agencies have not, however, made very great use of the
procurement services of the General Services Administration.
Only three agencies reported obtaining as much as 25% of their
"outside Washington" hearing spaces through the General Serv-
ices Administration. There appear to be three reasons for this:

(a) The agencies may believe that there simply is no
space available, to G.S.A. or anyone else;

(b) The agencies may have found the G.S.A procedures
inconvenient, cumbersome or unproductive in the past, and/
or feel that their examiners can more readily obtain space
through the local bar or local agency representatives; or

(c) The agencies may feel that G.S.A. representatives do
not understand the quasi-judicial character of the proceed-
ings and cannot be relied upon to obtain appropriate space.

Much of the shopping about for space appears to be impelled
by policies prohibiting the expenditure of funds upon hearing
spaces when free space can be obtained. While a reasonable
search for free space may promote the better utilization of Fed-
eral and state facilities, the direct money savings should not be
allowed to force agencies into improvised or demeaning spaces
that compromise the integrity of the proceeding and the dignity
of the process. The picture painted by complaints received by
your Committee of Examiners forced into crowded basement
rooms. Civil Service examination rooms complete with black-
boards and school desks, storage rooms, minimally furnished

REC. 1. HEARING FACILITIES 51

conference rooms, etc., makes a sad spectacle of the Federal ad-
ministrative process.

It is important to recognize that the words "hearing room"
do not mean the same to every agency, Examiner or General
Services Administration representative. In their survey responses,
agencies indicated individual variations as to the exact features
needed in their hearing spaces. The following five types of spaces
with total hearing room days of occupancy for Fiscal Year 1968
for all responding agencies indicate the most general types of
spaces required by the agencies :

Type A — A formal conference room with table space for up
to 16 principals and additional seating for up to 20
others. (Days of use: In Washington, 208; in the field,
13,806. Principal user: Ofl!ice of Economic Opportunity,
13,465 field hearings.)
Type B — A small hearing room with a raised dais, a wit-
ness box, a reporter's table, table space for up to 6 counsel
and additional seating for up to 30 others. The design and
furnishings would be those appropriate to a small court-
room. (Days of use: In Washington, 450; in the field,
379.)
Type C — A room identical to Type B but with additional
auxiliary rooms, normally an ofl^ce for the Examiner or
for the use of counsel and a room for sequestering wit-
nesses. (Days in use: In Washington, 1,128; in the field,
17,649. Principal users: In the field, N.L.R.B. with 3,450
adversarial hearings and 1,960 representation proceed-
ings, and Health, Education and Welfare with 12,000
(est.).)
The N.L.R.B. reports a need for a third auxiliary room in

its adversarial hearings.
Type D — A large hearing room accommodating up to 30
counsel at tables and up to 70 witnesses and spectators.
This room, too, would be designed and furnished in the
style of a courtroom, but would not provide auxiliary
rooms. (Days of use: In Washington, 648; in the field,
54.)
Type E — An auditorium appropriate for large proceedings
which might attract over 100 parties, spectators, etc.
(Days of use: In Washington, 64; in the field, 107.)
Two comments should be made in regard to this data. First,
the data is based upon approximations and estimates of agencies
as to what would have been the appropriate facility. Thus, an
N.L.R.B. hearing actually held in a conference room, but for

52 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES

which the agency feels a TYPE C facility was needed, was counted
under Type C. Second, this data is based upon 23 agencies re-
sponding as of November 1, 1968. The data should not be used,
therefore, to evaluate the justification for the permanent assign-
ment of field facilities, but should be used to obtain some idea of
the relative demand among the various types of space.

This differentiation as to type of facility immediately suggests
the need for two steps to optimize the procurement procedure.
First, there is a need for a detailed inventory of available spaces
by type. Second, there is a need for the formulation of explicit
specifications by type so that those providing space, those pro-
curing space, and those requesting space may reliably refer to
the same type of hearing room. A step in this direction has
already been accomplished by the preparation by the General
Services Administration of Occupancy Guides, in which general
hearing room requirements of a specific agency are described for
the regional offices of G.S.A. The G.S.A. has indicated that they
intend "to continue the study of your requirements and to fur-
ther improve this Guide whenever possible," so such a step con-
forms to G.S.A.'s own interest in specification of standards. The
Occupancy Guide descriptions are at present somewhat vague.
There is not sufficient detail to give a regional officer of G.S.A.
an idea of the quasi-judicial atmosphere that is required, of the
particular need for the Examiner to see and hear the witness
easily, of the need for a separation of the witness to impress
upon him the significance of his participation and testimony, of
the table space requirements of counsel and expert witnesses in
complicated, economic proceedings, or of the many other require-
ments peculiar to an administrative hearing that agencies en-
gaged in general conferences or meetings do not have. It is clear
that many of the spaces offered, accepted and then found inade-
quate by Examiners would not have been considered had all
parties fully understood the particular requirements of an ad-
versarial hearing on the one hand and the particular character-
istics of the space being offered on the other. A set of explicit
specifications would reduce the incidence of such misunder-
standings.

A recurring concern of the agencies and of the Examiners is
that the quasi-judicial character of the administrative hearing be
recognized and weighed in the definition of appropriate space.
To this end, it has been repeatedly suggested to the Committee
that it would be helpful in fixing the appropriate image in the
minds of administrative officers and other laymen involved in
the procurement of space if the hearing rooms were specifically

REC. 1. HEARING FACILITIES 53

labeled "Administrative Courtroom." Although of minimal cost,
such a step would appear to be useful in establishing the char-
acter of the proceeding.

The Committee found especially significant the support which
the bar and professional associations provided the agencies and
Examiners in their efforts to obtain more appropriate hearing
spaces. The Hearing Examiner Committee of the Administrative
Law Section of the American Bar Association has approved the
standards unanimously adopted by the Federal Trial Examiners
Conference in May, 1968, and has approved a resolution on this
topic for submission to the Section Council. See Attachment A.
The Federal Trial Examiners Conference standards are attached
as Attachment B. The Federal Bar Association Committee has
indicated its strong support, as have other bar associations.

The Committee has received several reports that complaints
have been made to N.L.R.B. Examiners by counsel objecting to
having hearings in N.L.R.B. spaces. An inquiry was therefore
directed to other agencies to determine whether there had been
other instances of such complaints, directed at improprieties or
the appearance of undesirable ex parte contacts between Exam-
iners and staff attorneys. Although nineteen other agencies re-
ported conducting hearings in or immediately adjacent to their
offices, no other agency reported receiving such complaints. Only
two others indicated a belief that a physical separation would be
desirable or necessary. A number of the agencies volunteered
the observation that the accessibility of such an arrangement
was important to the efficient conduct of agency business, and
one indicated that industry counsel appeared to prefer the ar-
rangement. At the informal meeting arranged by the Committee,
several participants indicated that when possible their agencies
made a positive attempt to separate hearings from their office
spaces, but this was not reflected in the survey responses. This
is a matter that can probably be best determined by each agency
for itself. Certainly no general rule can be imposed without risk-
ing serious interference with agency efficiency and there is no
evidence that a general rule is needed or would be practical.

Of fifteen agencies responding to a survey item inquiring
whether they had any formal reporting procedure for the con-
tinuing evaluation of the adequacy of hearing rooms, only one
agency said that it had such a procedure, the Interstate Com-
merce Commission. The form utilized for this purpose by the
Interstate Commerce Commission is herewith attached as At-
tachment D. A device for collecting specific reports of deficiencies
in facilities might well be more widely used to inform both the

54 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES

agencies and the General Services Administration. The represent-
ative of the General Services Administration indicated at the
informal meeting arranged by your Committee that it would very
much like to have the regular feedback of information as to
problems encountered by administrative agencies in arranging
for hearing rooms.

The procedures by v^^hich agencies obtain information as to
the availability of space vary from agency to agency. Most agen-
cies rely most heavily upon their field officers. The Federal Trade
Commission, for example, w^orks from lists compiled by its field
offices and from the Register Department of Jtistice and the
Courts of the United States. The Interstate Commerce Commis-
sion assigns responsibility to the Office of the Secretary, Section
of Records and Service, which works from a list of Federal facil-
ities available by cities in each ICC Region. In some cases
agencies go to the General Services Administration with a re-
quest for a specific courtroom or hearing room, sometimes with
a general request for space. Most commonly, however, the agency
or Examiner goes directly to the managers of identified space
and negotiates directly with them for the use of the space. This
bypassing of the General Services Administration is regarded by
several agencies as more efficient and reliable, but it may reduce
G.S.A.'s awareness of the agency's need and it may fail to develop
for the agency information as to the full range of space available
in a particular city.

When each agency was asked if the agency would be interested
in participation in a permanent space committee of agency rep-
resentatives, GSA officials, and members of the administrative
bar to overview the hearing facilities problem, approximately half
indicated that they would not. Approximately half indicated that
they would. The Committee feels that such an advisory committee
would prove useful to G.S.A. and the participating agencies.

Approximately half of the agencies indicated that they had
space permanently assigned in Washington or in field locations
or both for their exclusive use as hearing rooms. These agencies
indicated that such spaces were heavily utilized and that it was
normally impracticable for them to be made available to other
agencies on a regular basis. When such space is free, however,
it should be made available to other agencies for non-conflicting
use.

REC. 1. HEARING FACILITIES 55

ATTACHMENT A
Resolution

Whereas, by resolution of the Board of Governors of the American Bar
Association, as approved by its House of Delegates, the Section of
Administrative Law has bsen directed, on behalf of the Association, by all
necessary and proper means, to preserve the gains made by the adoption of
the Administrative Procedure Act as the law of the land, and

Whereas one of the objectives of the Administrative Procedure Act was
and is to improve and enhance the standing and stature of Hearing Ex-
aminers, and

Whereas the Council of the Section of Administrative Law is concerned with
the physical conditions under which Hearing Examiners perform their duties
and believers that the facilities afforded to them have a direct bearing on their
standing and stature, whether such facilities be viewed by agency personnel
or the public.

Now therefore be it

Resolved that the Section of Administrative Law urges the Federal
Government to provide Hearing Examiners with office facilities and
supporting personnel suitable to the discharge of their judicial function and at
least equivalent to those of professional legal personnel of like Civil Service
Grade within the same agency and which assure requisite privacy and confi-
dentiality, and

Resolved further that the Section of Administration Law indorses in prin-
ciple the "Standards for Federal Hearing Examiner Office Space, Equipment,
Supplies, Facilities and Staff" adopted by the Federal Trial Examiners
Conference on March 7, 1968, to the extent they refer to the foregoing, and

Resolved further that the Hearing Examiners Committee be assigned re-
sponsibility for conveying these views to any Government department or
agency which fails to provide Hearing Examiners with accommodations
consistent with these standards.

ATTACHMENT B

Hearing Facilities Required for Federal Administrative Proceedings
(Standards Adopted by Federal Trial Examiners Conference, May 1968)

1. GENERAL GUIDING PRINCIPLES

A. Nature of facilities should be commensurate with type of proceeding.
1. Courtrooms for trial of all adversary proceedings.

(a) Courtroom and accessory facilities should be that of, or equiv-
alent to that of, United States District Court or highest State court
of original (i.e., trial) jurisdiction.

(b) Courtroom of U.S. Referee in Bankruptcy is adequate in
those cases where it in fact provides facilities reasonably sufficient
for the number of counsel and witnesses.

(c) Auxiliary courtrooms (or Federal Administrative Court-
rooms) — if feasible, with the facilities usually connected therewith

56 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES

(e.g., private office, counsel room, and witnesses room) — should be
provided in all Federal buildings and courthouses wherever possible,
for use by Federal Trial Examiners when courtrooms of United
States District Court and Referee in Bankruptcy are not available.
2. Small court or conference rooms for nonadversary proceedings.

(a) Adequate in size, considering needs of counsel (if any) and
the number of witnesses.

(b) Should ensure impression that a formal Government proceed-
ing is being conducted.

B. Except at an agency's headquarters, trial of administrative proceedings
should not be conducted in premises of the agency.

C. Procurement of courtrooms for trial of Federal administrative proceed-
ings should be the responsibility of General Services Administration. The
cooperation of the Administrative Office of the United States Court and the
Department of Justice should be obtained in the implementation by General
Services Administration of these Standards.

D. Responsibility within the agency itself for ensuring compliance with
these Standards should be lodged in the agency's Chief or senior Trial Ex-
aminer, and not in investigating, prosecuting, administrative, or other per-
sonnel of agency.

II. SPECIFICATIONS FOR FEDERAL ADMINISTRATIVE COURT-
ROOM FACILITIES

A. Existing Federal Facilities {Non-Agency)

1. Where Federal courtrooms are not in use for judicial proceedings,
they should routinely be made available, upon request, for use by Federal
Trial Examiners for adversary Federal administrative trials.

2. Where Federal courtrooms are not available. General Services Ad-
ministration should provide (by lease or otherwise) for use of State,
county, or local courtrooms and accessory facilities.

3. Order of preference :

(a) Courtroom of United States District Court.

(b) Courtroom of U.S. Referee in Bankruptcy (or, when provided.
Auxiliary Courtroom or Federal Administrative Courtroom).

(d) County courtroom.

(e) Local (e.g., city) courtroom.

4. Facilities normally available to trial court judge (private office
and lavatory) should routinely be made available to the Federal Trial
Examiner together with the courtroom.

5. Federal Trial Examiners should be charged with enforcement of
rules of decorum (e.g., no smoking) locally applicable to the particular
facilities.

6. When constructing or furnishing Auxiliary Courtrooms of Federal
Administrative Courtrooms in existing Federal Buildings, Federal Court-
houses, and Post Office Buildings, the courtrooms should be the same as
or comparable to the United States District Courtroom, except the spec-

REC. 1. HEARING FACILITIES 57

tator section may be smaller. All other facilities normally connected with
District Courtroom (office with private lavatory, counsel room, and wit-
nesses room) should be provided.

B. Federal Facilities (Non-Agency) under Construction or Projected —
All planned or projected new Federal building facilities, as well as those
where space is available, housing a Federal courtroom (and also those not
housing a Federal courtroom, where space is available and a need for regu-
lar use exists) — e.g., Federal Courthouses, Federal Buildings, Federal
Complexes, Federal Centers, Post Office Buildings — should contain one or
more Auxiliary Courtrooms or Federal Administrative Courtrooms, ap-
proximately equivalent to United States District Courtrooms, except the
spectator section may be smaller; including, as part thereof, a private office
with lavatory for the Federal Trial Examiner, a counsel room, a witnesses
room.

Note: In this connection, see, e.g., "Symposium" Courthouses and Court-
rooms," Judicature (Journal of the American Judicature Society), Octo-
ber-November 1966, for examples of modern courtroom design.

C. Agency Facilities

1. Except at an agency's headquarters, adversary Federal adminis-
trative trials should not be conducted on the premises of the agency it-
self, unless absolutely essential because no other facility is available.

2. In those instances where adversary Federal administrative trials
cannot be conducted elsewhere, the trial facilities shall in all cases com-
ply with acceptable operational standards (e.g., bench on dais, proper
Reporter's facilities, witness box or chair at a reasonable distance from
the Federal Trial Examiner and counsel, counsel tables of adequate size,
adequate space and configuration of furniture to permit note-taking and
consultation with clients and witnesses, and private office for the Federal
Trial Examiner).

RECOMMENDATION NO. 2
U.S. GOVERNMENT ORGANIZATION MANUAL

RECOMMENDATION

2. Included in the description of each agency should be infor-
mation concerning the means by which more detailed knowledge
of the agency's organization and functions may be obtained.

REPORT OF THE COMMITTEE ON INFORMATION. EDU-
CATION, AND REPORTS IN SUPPORT OF RECOMMEN-
DATION NO. 2

The Committee on Information, Education, and Reports sub-
mits that the U.S. Government Organization Manual should be
a compact reference handbook designed to guide the user to
effective initial contact with out Federal government, and that
this Manual should, by the excellence of its presentation, reflect
credit on the government and the Republic. Consonant with the
accompanying report your Committee finds that the Manu/il can-
not achieve these high standards under present procedures; that
the principal faults lie in the narrative text submitted by the
agencies; and that correction of these faults will require rewrit-
ing the text at the highest level of competence afforded by the
submitting agency.

I. Background

The "Daily Revised Manual of Emergency Agencies and Facil-
ities" of 1934, forerunner of the present United States Govern-
ment Organization Maniuxl, was limited to the activities of New
Deal agencies. The format was broadened later to provide infor-
mation on all phases of Government organization and activities.
The Manual sought to meet the needs of libraries as a part of
their basic reference works in Government; of colleges, universi-
ties, and secondary schools as textbooks or as corollary reading;
of legal and professional groups, and of Federal agencies, for
use of their personnel.

For a considerable period after its creation the Manual was a
model Baedeker. Clearly written, compact, and well organized,
it served the needs of citizens seeking help in threading the
bureaucratic maze. But though updated annually it was never
revised, and it gradually lost the qualities that had made it
excellent. Subjected to frequent, piecemeal amendments, the prod-
uct of a generation of ever-changing agency writers who bor-
rowed more and more heavily from job descriptions and other
papers intended for internal agency use, the Manual became more
difficult to use.

Today it is foundering in a polysyllabic sea of Federal prose —

60 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES

a handbook that is no longer handy, a guidebook in need of a
guide. Unless means are found to reverse present trends, the
Manual will continue to sink into a state of increasingly limited
usefulness.

II. Findings

The Committee on Information, Education, and Reports be-
lieves that the time has come for complete revision of much of
the text, for rev^'riting "from scratch" of the descriptions of
many of the older agencies.

The Manual is neither a directory nor an internal management
manual. In its ideal form, it should provide basic information
on the organization and functions of all agencies with emphasis
on bureaus or divisions with which members of the public can
be expected to deal.

This goal demands brevity and simplicity. The user should
not be subjected to extraneous matter couched in job-sheet lan-
guage and paragraph-long sentences (see for example pages 67,
92, 134, 135, 194, 369 of the 1968-1969 edition). Material re-
lating to the internal operations of agencies such as that on
page 106 should be eliminated, thereby giving needed space for
the inclusion of more newly created governmental units without
swelling the Manual to cumbersome size. Descriptions of offices
dealing with management, data processing, etc., abound in the
Manual (see pages 92, 93, 106, 116, 182-184, 243, 297, 393, 476, 477,
548, 569). The space devoted to such units should be greatly
reduced or eliminated entirely.

The usefulness of the Manual would be further increased if
the oldline departments would follow a uniform pattern of confin-
ing the narrative text to descriptions of the operating bureaus
and divisions where programs vis-a-vis the public are actually
carried out. Space allotted to outlining the responsibilities of
Under Secretaries, Assistant Secretaries, and other individuals
results in unnecessary repetition and confusion (e.g. pages 133,
242, 302, 303, 353). Personnel listings and organization charts
illustrate adequately a department's lines of authority.

III. Conclusions

The gradual deterioration of the Manuul has taken place in
spite of efforts on the part of the editors to rejuvenate it. The
limited but able Federal Register staff has prepared a "Handbook
on Document Drafting" Chapter II of which is entitled "How to
Prepare Manuscript for the U.S. Government Organization Man-

REC. 2. ORGANIZATION MANUAL 61

ual." This material is used in training sessions for agency per-
sonnel and the pertinent text is distributed each year as work on
a new edition of the Manual begins. But at best these actions
have merely retarded the rate of decline.

The problem in its simplest terms is one of leadership within
the contributing agencies. In a period characterized by ever
greater emphasis on the public's right to know, many agencies
have been unwilling to assign top talent to the Manual, despite
substantial expenditures for information functions.

More often than not the work has been delegated to sub-
ordinate personnel or used as a training medium for new em-
ployees at the entrance grade. There is an understandable hesi-
tancy on the part of such employees to see the problem from the
public's point of view and to delete or reduce material which is
of importance chiefly within the agency.

Under present conditions it is difficult, possibly even unfair,
for the Federal Register editors working on the Manual to de-
mand that some agencies limit the length of new material —
which may be valuable — because others jealously retain space for
years to describe obsolescent functions or to trace the history of
present operations.

The experience of many years has convinced the Federal Regis-
ter staff that the drafting of concise and informative statements
of agency functions, projects, programs, and services should be
the work of qualified agency staff members — employees at the
highest level of competence, fully clothed with authority to act.
The Committee on Information, Education, and Reports concurs
in this conviction.

RECOMMENDATION NO. 3

PARALLEL TABLE OF STATUTORY AUTHORITIES
AND RULES (2 CFR CH. I).

The Parallel Table of Statutory Authorities and Rules (2 CFR
ch. I) should be an accurate and complete listing of United
States Code provisions cited as rulemaking authority in executive
agency documents which prescribe general and permanent rules.
The present Parallel Table is deficient. Agencies have not given
sufficient time and attention to citing proper authorities and to
keeping them current. Moreover, the Table's present method of
preparation leads to omission of relevant references.

RECOMMENDATION

1. Each agency covered by 5 U.S.C. 552 should review all of its
rules published in the Code of Federal Regulations to determine
if the cited rulemaking authorities are complete, accurate, and
current. The Conference requests that formal documents correct-
ing deficient citations be submitted to the Office of the Federal
Register for publication in the daily "Federal Register."

2. The Office of the Federal Register should take the steps
necessary to broaden the coverage of the Table to include per-
tinent citations in preambles and in codified text as well as those
in the formal statements of authority.

REPORT OF THE COMMITTEE ON INFORMATION, EDU-
CATION, AND REPORTS IN SUPPORT OF RECOMMEN-
DATION NO. 3

The Committee on Information, Education, and Reports sub-
mits that the Parallel Table of Statutory Authorities and Rules
(2 CFR Ch. I) should be an accurate and complete listing of
United States Code provisions cited as rule-making authority in
Executive agency documents which prescribe general and per-
manent rules. The Committee finds that the Parallel Table is
deficient as an accurate and dependable finding aid because (1)
agencies have not given sufl!icient time and attention to citing
proper authorities and to keeping them current; and (2) the
Table's coverage is not broad enough to include useful citations
now lost under present methods of preparation.

I. Background

The Parallel Table was originally designed to lead the legal
researcher from the enabling act in his hand to the resultant
reglation in the Code of Federal Regulations. The Table is based
on the requirement of the Administrative Committee of the
Federal Register that every agency rule must be covered by a
citation to the authority under which the provisions are issued,
which reads as follows :,

§ 17.45 General requirements.

Each section in a document subject to codification shall
include, or shall be covered by, a complete citation of the
rule-making authority under which the provisions of the
section are issued, including (a) general rule-making author-
ity delegated by statute, (b) specific rule-making authority,
if any, delegated by statute, and (c) executive delegations,
if any, necessary to link the statutory authority to the
issuing agency.
In the early days of the Federal Register when agency writers
and their counsel were just learning how to draft Federal Register
documents, the Federal Register Office employed a staff of at-
torneys whose primary function consisted of reviewing agency
documents. Part of this review involved verifying authority

64 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES

citations and calling the agency when a citation was in error or
incomplete. By 1960, the volume of published rules had increased
beyond the means of the small Federal Register staff. In addition
to this, it was reasonable to assume that the issuing agency was
now in a much better position to know what laws it was imple-
menting and how to cite them. Consequently the Federal Register
regulations were amended by adding the following section under
the heading "Citations of Authority" :

§ 17.46 Agency responsibility; amendments.

The accuracy and integrity of citations of authority are

the responsibility of the issuing agency. Such citations shall

be formally amended by the issuing agency to reflect changes

in authority.

Now without benefit of the close review of authorities by the

Federal Register staff, the general counsel of every agency was

expected to be extremely careful in providing the correct authority

citations and keeping them current. The Federal Register Office

continued to provide assistance to small agencies which have no

general counsel and to others on request.

To prepare the Parallel Table, Federal Register editors search
the agency rules and list all United States Code provisions appear-
ing in the authority citations. Authorities consisting only of
public law number on U.S. Statutes at Large citations are
changed to the parallel United States Code reference when possi-
ble. The Table is published annually as Chapter I of Title 2 of
the Code of Federal Regulations. Additions to the Table are
printed monthly at the end of the "List of CFR Sections Af-
fected," a supplementary guide to the daily Federal Register.

U. Findings

The accuracy of a citation is the issuing agency's responsibil-
ity; thus the reliability of the Table depends primarily on the
care the agency takes to present and keep current the proper
citations of authority for every provision promulgated. The de-
gree of care has varied beyond acceptable limits. A spot check
of the Table revealed many questionable entries. One citation
may be so general that it is of little help to the researcher (see
18 CFR Part 602 or 25 CFR Part 22). Another may be so long
and complicated that it tends to create confusion (see 46 CFR
Part 163). One U.S.C. citation in Title 46 leads the researcher
to more than 70 CFR parts. Further examination indicated little
concern by the agency as to whether its citations of authority
are really accurate or pertinent. Some rules have no citation to

REC. 3. CFR STATUTORY TABLE 65

the United States Code (see 25 CFR Part 47) ; others cite ma-
terial in the text of the rule which is not picked up for the
Table (see 42 CFR 77.1). And there are instances of total mis-
understanding of what authority to use (see 32 CFR Part 257).
There is also a lack of concern about keeping citations current.
Some rules in Title 7 CFR cite many authorities which have
been obsolete for years. A review of 7 CFR Part 1871— a brief
regulation— revealed that twenty-three of its twenty-seven cita-
tions were wrong, or unnecessary: Three of the provisions cited
had been renumbered, fourteen had been repealed, three had re-
lated to bankruptcy actions, two applied only to Territories, and
one was an authorization for appropriations rather than a rule-
making provision.

III. Conclusions

To improve the table, at least two steps should be taken:

First, the agencies must be urged to review their statutory
citation practices with the Parallel Table in mind. This review
should include references appearing in the authority citations
themselves, in the text of the rules, or in the preamble. All
changes should then be included in formal documents prepared
for publication in the Federal Register as CFR amendments.

Second, when the revised Parallel Table is prepared, its cover-
age should be expanded to include citations in preambles and
substantive text, as well as those in the formal authority state-
ments. At present, the Table lists only United States Code pro-
visions cited as authority for issuance. Well-drafted rules nor-
mally contain a section called "Scope and purpose." This section
cites statutory provisions being implemented by the rule. Often
this valuable citation is not repeated in the authority citation,
hence is not picked up for the Parallel Table.

Sometimes an agency will cite useful authorities in the pre-
amble or discussion paragraphs of a document. Since only the
substantive text of the rule is published in the Code of Federal
Regulations, these citations also are lost.

Finally, there are many instances where a pertinent citation
is missing, either because the statutory provision is not citable
to the United States Code, or because the rules were issued before
the United States Code supplement was published. A supple-
mentary table listing these provisions by law number and U.S.
Statute page should be created.

RECOMMENDATION NO. 4
CONSUMER BULLETIN

Most Americans are probably unaware of the multitude of day-
to-day Federal activities reflected in proposed, revised, and re-
cently promulgated rules, regulations, or determinations which
substantially affect the price, quantity, quality, labeling, safety,
and other aspects of products and services available to the public.
A bulletin of general distribution containing an easily understood
summary of current information about administrative activities
in areas of consumer interest could serve a widespread public
need which is not now met by the "Federal Register" or by
agency and private publications of a more specialized nature.

RECOMMENDATION

1. A consumer bulletin should be established on an experimen-
tal basis. It should extract and paraphrase in popular terms the
substance of Federal agency actions of significant interest to
consumers. Initially, the bulletin should concentrate on items
published in the "Federal Register," but as it gains public ac-
ceptance, it should be broadened to include materials secured
from other sources. It should indicate expressly that the bulletin
does not constitute oflficial notice of government action.,

2. The Office of the Consumer Counsel in the Department of
Justice appears at this time to be the agency best prepared to
publish such a bulletin. If the bulletin were undertaken by that
office it could not only disseminate information, but also stimulate
public response, thus aiding the effective discharge of the duties
of the Consumer Counsel.

3. Initial circulation should include the press, consumer orga-
nizations, public and scholastic libraries, and individuals who re-
quest to be put on the mailing list. Format, subscription costs,
frequency of publication, and related matters should be the sub-
ject of study during the experiment.

4. After a reasonable period of time, the effectiveness of and
interest in the bulletin should be evaluated to determine whether
it should be continued and, if so, in what form.

REPORT OF THE OFFICE OF THE CHAIRMAN
IN SUPPORT OF RECOMMENDATION NO. 4

The only federal publication of general national circulation
which contains announcements and information of proposed or
new government rules and regulations of interest to consumers
is the Federal Register. As Miss Betty Furness, Special Assistant
to the President for Consumer Affairs, stated in a letter to the
Chairman of the Administrative Conference suggesting the de-
velopment of a Consumer Bulletin :

"I have become concerned about the lack of consumer involvement in
government rule making affecting consumers. Day by day, agencies of our
government fill the Federal Register with proposed and final rules, or-
ders, and policies which directly and importantly affect consumers. Yet
these publications go virtually unnoticed by consumers. More impor-
tantly, consumers are not participating in the establishment of the rules
which are supposed to reflect the interest of the consumer.

"When the laws prescribing the method of publication and issuance of
regulations were designed, they were aimed largely at providing a fair
notification procedure for the industry regulated under the rules. No
doubt this system has afforded 'due process' to the regulated industry.
Yet the system apparently does not perform the function of providing
the consumer with notice sufficient to stimulate him to participate in the
making of rules which directly and significantly affect him. Stated in an-
other way, it may be that the legal requirements of fairness also necessi-
tate additional assistance to the consumer.

"Obviously, the consumer is in a poor position to attempt to compre-
hend the legal and technical language comprising the typical Federal
Register notice — if. indeed, he knows of the existence of the Federal
Register. The consumer does not have the benefit of the professional ad-
vice available to industry through house counsel, trade associations,
trade papers, "Washington counsel, etc. In most cases he has neither the
time nor the collateral library materials to allow him to keep track of
developments.

"With the above in mind, I am submitting for the consideration of the
Administrative Conference a file containing a few suggestions developed
in my office for involving consumers in governmental rule making.

"Essentially, what I am proposing is that there be established a regu-
lar publication serving the needs of consumers in the same way that the
Federal Register serves the needs of the regulated industry — a 'Con-
sumer's Federal Register' if you will. I think it would serve consumers'
needs if the major issues, culled from each proposed and final rule di-
rectly and importantly affecting consumers, were summarized in such a
publication with brief explanation of how the consumer could register his

68 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES

views or obtain more information from the agency issuing the rule. The
publication could be made available to consumers for a nominal sum.

"Our proposal does not explore the questions of whether fairness or
the elements of due process for consumers also might require preliminary
public hearings prior to the adoption of such a rule, and of whether the
validity of such a rule might be made dependent upon proper translation
and publication for consumers. These and other questions pertaining to
the proposal are deferred to you and the Conference."

Upon receipt of the letter from Miss Furness, the Council
members were contacted and it was agreed that a Consumer
Bulletin should be the subject of a study by the Conference.
Mr. Leonard Niederlehner, Acting General Counsel of the De-
partment of Defense, and Chairman of the Committee on Infor-
mation, Education and Reports was advised of this determination.
The Consultant to that Committee, Professor Jerome Shuman of
Howard University, immediately undeftonk ar-^study of the legal
and other problems. At the same time, the professional staff of
the Conference surveyed the kinds of information currently avail-
able in the Federal Register which might appropriately be in-
cluded in such a Bulletin. Appendix A describes items found in
the Federal Register during a two-week period chosen at random.

Professor Shuman interviewed a number of individuals within
and without government; and in an informal memorandum rec-
ommending the establishment of a Consumer Bulletin, he said:

"Federal agencies generally publish in a wide variety of formats the
decisions, activities, findings and rulings which take place within the
scope of their operations. Much of the information contained in these
publications have consumer implications. However, the consumer remains
unaware of many of the rules, orders and policies established by govern-
ment even though he is directly affected by them. * * * What is needed
is a regular publication that will serve the needs of the consumer in
much the same way the Federal Register serves industry. The proposed
bulletin would bring together in one place this consumer information. The
information contained in the Bulletin would be drawn from existing gov-
ernment publications. No agency need be required to develop information
especially for the Bulletin. In its initial stage the information in the Con-
sumer Bulletin could and should parallel that incliided in the Federal
Register except it would be brief and would be written in language read-
ily understandable by all."

Professor Shuman noted the existence of several excellent pri-
vate publications, as well as those of some agencies, none of
which, however, has the scope of the proposed Bulletin.

After considering several alternatives, he concluded :

"The newly created Office of Consumer Counsel should be the office re-
sponsible for the development, publication and dissemination of the Con-
sumer Bulletin."

REC. 1. CONSUMER BULLETIN 69

The subject was considered by the Council at its meeting on
November 11, 1968. The recommendation to establish a Consumer
Bulletin in the Office of Consumer Counsel, Department of Justice
on an experimental basis was approved. Subsequently, the Ad-
ministrative Conference has been advised that the Attorney Gen-
eral, and the Consumer Counsel, Mr. Paul Bower, support the
establishment of a Consumer Bulletin and its publication by the
Office of Consumer Counsel.

ATTACHMENT

Illustrative Material Selected from the Federal Register
(Covering the Two Week Period Beginning April 23, 1968)

Headlight Concealment Devices— Referring to "reports of several accidents
and incidents caused by . . . inadvertent blacking out of headlamps," the
Federal Highway Administration announced that it has adopted a Motor Ve-
hicle Safety Standard for headlight concealment devices. Among other provi-
sions in the new Standard is a requirement designed to insure fail-safe
operation of such a device in the event of a malfunction affecting its power
supply. If provided on an automobile built on or after January 1, 1969, the de-
vice must remain open if it is open when the malfunction occurs; and if it is
not open at the time, it must be capable of being opened without using tools.
More Automobile Safety Standards— Other new Safety Standards of Fed-
eral Highway Administration provide for:

—A second hood latch or latching system, if a sudden hood opening would
partially or completely obstruct the driver's forward view (effective
1-1-69).
— Three anti-theft features:

1. More key and lock variations (no less than 1000 for a major manu-
facturer).

2. A wheel-locking or steering-locking system triggered by removing
the ignition key.

3. A warning device which is activated when the driver opens his door
without removing the ignition key.

(All effective 1-1-69)

Pesticides — The Food and Drug Administration has issued a statement of
policy setting forth guidelines which the agency will follow in fixing toler-
ances for pesticides that might find their way into milk, eggs, meat or
poultry. These tolerances regulate the amounts of poisonous or possibly
poisonous pesticides that may be used on raw agricultural commodities.

"Made in U.S.A." — In an advisory opinion issued on April 4, 1968, the Fed-
eral Trade Commission ruled that this label cannot be placed on garments
manufactured in this country from imported cloth.

Instant Nonfat Dry Milk — The Department of Agriculture and the Depart-
ment of Health, Education, and Welfare have reached a policy agreement
which will serve as a basis for a coordinated instant nonfat dry milk pro-

70 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES

gram. The program will include minimum standards and inspection provi-
sions for manufacturing grade milk, the farms which produce it, and the
plants and equipment which process it. The two Departments also agreed
that these standards should be made progressively more stringent.

In-Flight Entertainment and Service of Alcoholic Beverages — In light of a
number of objections, the Civil Aeronautics Board has decided to reconsider
its recent policy statement concerning passenger charges for visual in-flight
entertainment and in-flight service of alcoholic beverages. Under this policy
statement the airlines were advised to make separate charges for these serv-
ices. The rule did not apply, however, to beer and wine served with meals.

Cottage Cheese Ingredient — A petition has been filed with the Food and
Drug Administration which requests the FDA to amend its rules so as to per-
mit the addition of lactose to the creaming mixture used in the preparation
of cottage cheese. According to the petition, lactose would improve the flavor,
body, sensation of richness, shelf life and eye appeal of the product. The
FDA invites all interested persons to submit their views in writing (prefera-
bly with four extra copies) on or before June 1, 1968. Comments should be
addressed to: Hearing Clerk, Department of Health, Education, and Wel-
fare, Room 5440, 330 Independence Avenue, S.W., Washington, D. C. 20201.

Catsup — The FDA has been requested in another petition to amend its iden-
tity standard for tomato catsup insofar as sweetening agents are concerned.
Catsup may now be sweetened with dextrose only if it is used in combination
with sugar, and with corn or glucose syrup only if the corn or glucose syrup
solids do not exceed one-third of the solid weight of all sweetening mixture.
The proposed amendment would permit dextrose to be used as the sole sweet-
ener and increase the allowable proportion of corn and glucose syrups. The
FDA has invited comments, and except for the deadline, the procedure is the
same as that for the proposal affecting cottage cheese which is described
above; in this case comments must be filed on or before June 29, 1968.

RECOMMENDATION NO. 5

REPRESENTATION OF THE POOR IN AGENCY
RULEMAKING OF DIRECT CONSEQUENCE TO THEM

RECOMMENDATION

A. Agency Efforts

1. Federal agencies should engage more extensively in affirma-
tive, self-initiated efforts to ascertain directly from the poor
their views with respect to rulemaking that may affect them
substantially. For this purpose, agencies should make strong
efforts, by use of existing as well as newly devised procedures, to
obtain information and opinion from those whose circumstances
may not permit conventional participation in rulemaking pro-
ceedings. The "rulemaking" referred to is that defined by the
Administrative Procedure Act, § 2(c), 5 U.S.C. 551 (4) and (5).

2. Agencies should employ as many of the following procedures
as are feasible, practicable, and necessary to assure their being
fully informed concerning the relevant interests of the poor :

(b) Agencies should hold formal public hearings or informal
conferences in close geographic proximity to the poor substan-
tially affected by contemplated rulemaking.

(c) Agencies should take care to invite individuals constituting
a representative cross-section of the poor to submit their views
orally or in writing as to proposed rules substantially affecting
the poor.

(d) Agencies should conduct field surveys among the poor to
discover their attitudes concerning particular government policy-
making substantially affecting them.

(e) Agencies should use advisory committees made of rep-
resentatives of the poor as continuing consultants for all pro-
grams having a substantial effect on such persons.

72 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES

payments for this purpose. Agencies already authorized to make
such payments in whole or in part should use their existing
authority and should allocate funds accordingly.

In deciding whether the use of any one or more of the above
devices is feasible, practicable, or necessary in a given situation,
agencies should resolve doubts in favor of utilizing them; but
their enumeration should not exclude or discourage the develop-
ment and use of other devices to achieve the same result.

In carrying out paragraphs 1 and 2 of this recommendation,
agencies should consult with and coordinate their efforts with
other Federal agencies having responsibilities in this area and
should make maximum feasible use of the facilities of such other
agencies for communicating with and obtaining expressions of
the views of the poor.

3. Agencies should be encouraged in appropriate circumstances
to determine that the exemptions in 5 U.S.C 553 (a) (2) should
not be applied with respect to rulemaking which may have a sub-
stantial impact on the poor.

B. People's Council

4. (a) An organization should be authorized by statute to em-
ploy a staff to act as "People's Counsel." The People's Counsel
should represent the interests of the poor in all Federal adminis-
trative rulemaking substantially affecting the poor.

(b) The People's Counsel should be charged with assuring
that the views of significant separable minority interests among
the poor are represented in such Federal administrative rule-
making.

(c) The People's Counsel should be required to disseminate to
all interested poor people's organizations pertinent information
concerning rulemaking substantially affecting the poor.

(e) The People's Counsel should be authorized to provide repre-
sentation for organizations and groups of the poor who seek
judicial review of administrative action substantially affecting
their interests. This recommendation is not to alter the kinds
of agency action amenable to judicial review, the requirements
of standing to seek review, or the scope of that review.

(f) As an incident to its main responsibilities the People's
Counsel should be empowered to recommend to Congress or the

REC. 5. REPRESENTATION OF POOR 73

President or to both such legislation or other action as it deems
appropriate to correct deficiencies in or otherwise improve Fed-
eral programs having a substantial impact on the poor.

(2) Federal financing of the Corporation should be made
available to the extent necessary to assure its effective
operation.

(3) The governing board of the People's Counsel Corpora-
tion should be constituted to give the poor meaningful rep-
resentation thereon. Such body should be constituted to
ensure close communication with the poor and effective rep-
resentation of the viewpoints of the poor.

6. All Federal agencies should be required by Executive order
to notify the People's Counsel of all proposed rules which would
have a substantial impact on the poor. Agencies also should be
required by that Executive order to give the People's Counsel an
opportunity to present the views of the poor with respect to such
proposed rules. Exceptions to these obligations should be per-
mitted only "when the agency for good cause finds (and incor-
porates the finding and a brief statement of reasons therefor in
the rules issued) that [such] notice and * * * [an opportunity
for the People's Counsel to present its views] are impracticable,
unnecessary, or contrary to the public interest." (See 5 U.S.C.
553(b) (B).) In these exceptional cases, agencies should be re-
quired to notify the People's Counsel as soon as practicable of
any consummated rulemaking substantially affecting the poor,
and should be required to give the Counsel as soon as practicable
an opportunity to communicate to the agency its views concern-
ing the desirability of further action with respect to such rule-
making.

Without prejudice to creating or empowering any other appro-
priate body to perform the general functions outlined in para-
graphs 4, 5, and 6, any special provision therefor should be so

74 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES

structured as to take maximum advantage of the capabilities in
this field of nongovernment organizations, and of other public
bodies, including notably the Office of Economic Opportunity.

Separate Statements ^ Concerning Recommendation No. 5

Statement of John H. Crooker, Jr.

The majority position with respect to recommendation No. 5
is that "Federal agencies" should make strong efforts to ascer-
tain from the poor their views regarding rulemaking "that may
affect them substantially." I believe that (a) the major independ-
ent agencies are seldom involved in rulemaking affecting the
poor except insofar as the poor are members of the public gen-
erally; and {h) it was the intent of the Congress, in establishing
the Administrative Conference, to have studies conducted and
information collected and interchanged, so that administrative
agencies might improve and expedite their general procedures.

Therefore, I doubt that the Congress, in enacting section 5 of
the Administrative Conference Act, 5 U.S.C. 574, intended that
the Conference should address itself to the matters treated in
recommendation No. 5. My dissent is not, in any way, directed
to the wording of the recommendation.

Statement of Paul Rand Dixon

I disagree with the adoption of paragraphs 4, 5, and 6 of rec-
ommendation No. 5 developed by the Committee on Rulemaking
respecting the creation of a People's Counsel to represent the
poor generally before Federal administrative bodies. I am fully
aware of and sympathetic with the plight of the poor in our
society. I recognize it as one of the primary problems that must
be solved if our democratic way is to survive. However, I am fully
of the opinion that this is a problem that should be debated and
resolved by Congress. I find nowhere in the legislative history
leading to the creation of the Administrative Conference of the
United States any thought that the Administrative Conference
would delve into this social problem. Even if I could bring myself
to the thought that it was rightfully within the purview of the
duties of the Administrative Conference to deal with the plight
of the poor, I still would question the wisdom of creating a Poor

'Title 5, U.S.C, sec. 575(a)(1) provides, in part, as follows: "A member who disagrees
with a recommendation adopted by the Assembly is entitled to enter a dissenting opinion
and an alternate proposal in the record of the Conference proceedings, and the opinion and
proposal so entered shall accompany the Conference recommendation in a publication or dis-
tribution thereof."

REC. 5. REPRESENTATION OF POOR 75

People's Counsel as the sole, if not principal, protector of the
rights of the poor. The plight of the poor needs everyone's pro-
tection, not just the protection of a People's Counsel.

So that my position will not be misunderstood, I want it clearly
known that I stand in the forefront of those who deem it neces-
sary to do more to protect those low-income people in our society
who are generally classified as poor.

Statement of Joe M. Kilgore, joined by Richard H. Keatinge;
Jim C. Langdon; Norman A. Flaningam; - Ross L. Malone;
Starr Thomas; Harold L. Russell

We did not support paragraphs 4, 5, and 6 of the recommenda-
tion No. 5. We do support encouraging the formation of and
recognition of a People's Counsel, as a private entity, to represent
the public interest in the ai'ea of rulemaking in Federal agencies;
with such Counsel being oriented to represent most fully those
of the public whose interests would otherwise be unrepresented
or underrepresented ; and with such People's Counsel being eligi-
ble to receive Federal grants as required to permit its function.

This dissent from the majority view is dictated by:

1. The concern that this proposed function should be re-
stricted, at least until experience might dictate otherwise, to
the rulemaking function.

2. The belief that the proposed representation should not
be limited to any segment of the public, even though its
principal thrust would be so directed.

Statement of Malcolm S. Mason

I support the purposes of this recommendation. When a People's
Counsel is constituted, however, it is important to make a dis-
tinction between two kinds of advocacy, so different that they
cannot be directly conducted by the same organization. There is
first of all adversary advocacy, owing an attorney's complete loy-
alty to a specific client. In this sense, there cannot be a People's
Counsel for the poor, because the poor are many and different
and must be able to speak with many voices. This kind of advo-
cacy is needed. It must be aggressive and hardhitting. If it is
conducted directly by a Government or Government-controlled
agency, its independence may be impaired. For this kind of advo-
cacy an appropriate model is suggested by the Legal Services
program conducted by many separate private local organizations:

- Mr. FlaniriKam joins in this statement noting that the term "rulemakinK" as used herein
refers to Federal agency processes for formulation, amendment, or repeal of rules of general
applicability.

76 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES

Funded by OEO, but free, and indeed encouraged, to act fully on
behalf of an actual client without limiting its vigor by reason
of relationship to OEO. This I believe, will also be the pattern of
the new HEW Legal Services program.

There is also cooperative advocacy : Unaggressive, quiet, non-
adversary, seeking to foster an awareness, a concern and a more
lively recognition that poor people are affected by proposed ad-
ministrative action. This kind of advocacy can be conducted by
a Government or quasi-Government organization without incon-
sistency and with benefit to the effectiveness of its work. An
appropriate model is suggested by such accomplishments as new
rules on loans to demonstration cooperatives of poor farmers
(achieved by mutual agreement of the Department of Agriculture
and OEO) ; new clarification of Government security regulations,
removing barriers to the employment of hard-core unemployed
with a criminal record (achieved by joint action of the Depart-
ment of Defense, Department of Labor, and OEO) ; a new con-
sensus on the wider use of policy advisory boards in programs
affecting the poor (resulting in part from encouragement of this
kind of action by OEO) .

Statement of Nathaniel L. Nathanson

I would like to explain why I voted in favor of the recommenda-
tion for a People's Counsel, as amended during the debate, because
I believe that my interpretation of the final action taken may
have been shared by others who also voted in favor of the proposal
and is therefore entitled to some consideration in efforts to secure
its implementation.

While I was deeply troubled by some of the arguments advanced
against the proposal, particularly by the misgivings expressed con-
cerning the arrogance of a government agency or public corpora-
tion undertaking to determine the interests of the poor in partic-
ular agency action, I felt that this concern could be met by
emphasis upon the representative character of the People's Coun-
sel and a requirement that specific, identifiable interests be rep-
resented, rather than hypothetical interests which might be
imagined by the People's Counsel. This requirement could appro-
priately be implemented by the further requirement that those

REC. 5. REPRESENTATION OF POOR 77

interests be identified in the form of particular groups or as-
sociations who could determine their own interests and make
their own wishes or basic positions known to the People's Counsel.
This view was certainly made explicit in the amendment, pro-
posed by the Judicial Review Committee and accepted by the Rule-
making Committee, to paragraph 4(e) and it is also consistent
with the final language of paragraph 4(d) as amended in the
course of the debate so as to substitute "participate suitably" for
the original word "intervene." This left a large measure of dis-
cretion to each agency in allowing participation by the People's
Counsel in a particular proceeding, including the requirement of
a showing that the concern or position which the People's Counsel
undertook to present was in fact shared by an identifiable
group of people who were at least informed of the position
which the People's Counsel was taking. I also doubt that the
leaders of the poor people's movement who were quoted by
Professor Bonfiield as favorable to the proposal envisaged a
People's Counsel who would not be in any way answerable to the
people he undertook to represent.

I appreciate that this interpretation, emphasizing as it does
the representation of identifiable groups who may exercise some
control over the People's Counsel, may not be entirely acceptable
to the original proponents of the proposal, particularly those who
accepted the amendments with some reluctance. Nevertheless,
they did accept the amendments, presumably for the purposes
of mollifying the opposition and with some appreciation of the
fact that the reasons for the amendments were more than techni-
cal. Particularly in view of the closeness of the vote on the final
approval of paragraphs 4, 5, and 6, the original proponents are
hardly now in a position to insist upon the rejection of a rea-
sonable interpretation which may have been decisive in the ap-
proval of the recommendation. They may also take comfort in
the fact that the current requirements for standing to participate
in both administrative and judicial proceedings by groups in-
directly affected by governmental action will scarcely inhibit
the activities of a People's Counsel anxious and resourceful enough
to find out what the people he purports to represent really want.

Statement of Robert W. Graham

May I respectfully record my dissent from the recommenda-
tions of the Conference embodied in paragraphs 4, 5, and 6 of
recommendation No. 5. No one can disagree with the stated
objectives of these recommendations, and I do not. However, I
do not conceive that these recommendations are appropriate

78 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES

within the mission of the Administrative Conference in its efforts
to seek improvement of administrative procedures. Furthermore,
I consider unsound attempts to fractionate the public interest
which is properly the concern of our Federal administrative
agencies.

REPORT OF THE COMMITTEE ON RULEMAKING
IN SUPPORT OF RECOMMENDATION NO. 5

Prepared by

Arthur E. Bonfield

Professor of Law

University of Iowa

I. The Problem

A. Generally

The sound operation of the federal administrative rulemaking
system demands that all relevant interests and viewpoints be
considered prior to the formulation and promulgation of« its prod-
uct. Only after such an examination can the responsible officials
have any confidence in the soundness of the rules they create.
Oflficials engaged in rulemaking for the federal government are
usually apprised of the various interests and viewpoints deserving
consideration in that process by representatives of individuals
affected by their actions.

The ample personal economic resources and relatively well-
financed organizations of middle and upper income Americans
usually assure their particular interests adequate representation
in federal administrative rulemaking. The norm is that middle
and upper income individuals, or their personal or organizational
representatives, directly or indirectly monitor all agency activ-
ities. These persons attempt to protect their interests through
formal or informal participation in rulemaking affecting them.
But federal rulemaking very frequently affects large numbers of
individuals who lack the personal economic resources and orga-
nized associations of middle and upper income Americans. These
economically underprivileged persons are usually unable to keep
themselves adequately informed of the numerous actual or pro-
posed exercises of rulemaking authority affecting their interests.
Normally the poor are also unable to communicate effectively to
the appropriate authority their views about proposed rules, or
to petition in their own interest for new rules or for the amend-
ment or repeal of old rules.

80 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES

An agency promulgating rules affecting the poor cannot as-
sume that it automatically knows what is best for such people.
Government administrators are usually persons with middle-class
backgrounds, experiences, and associations; therefore, they tend
to have middle-class viewpoints, orientations, and understand-
ings. This means that the personnel of federal agencies may be
expected to reflect more accurately the interests of the affluent
than those of the economically underprivileged. Consequently,
there is a special reason for concern when, as is now the case,
the interests of poor people are inadequately represented in the
rulemaking process.

The administration of government undoubtedly suffers as a
whole from the inability of the economically underprivileged
segment of our society to represent adequately its group interests
in the rulemaking process. The inability of the poor in this respect
is injurious to the government's sound administration because
it sometimes results in the formulation and promulgation of policy
without consideration of all the relevant viewpoints. Recent re-
sponses of the poor to the product of such an improperly func-
tioning process have been expensive, time-consuming, and
unfortunately, too often destructive. Ill-considered rules have fre-
quently caused litigation, civil disobedience, and on occasion,
riot. Some of this might have been avoided if the views of the
poor were considered in the initial formulation of agency policies
affecting them.

This conclusion does not ignore the many well-intentioned and
often considerable efforts of the appropriate officials to ascertain,
by their own investigations, the views of the economically under-
privileged concerning administrative rulemaking that affects
them. But available evidence establishes that these official efforts
have been insufficient to compensate for the inability of the poor
affirmatively to represent their own interests in rulemaking. The
fact is that government administrators are too often inadequately
apprised of the poor's views respecting the desirability of existing
or proposed rules.

B. General Summary of the Evidence

Substantial evidence supports the conclusion that the poor of
our society have been inadequately represented in federal rule-
making. Some original data on this subject was obtained from a
questionnaire entitled "Survey of Participation of the Poor in

REC. 5. REPRESENTATION OF POOR 81

Agency Rulemaking of Particular Interest to the Poor" distrib-
uted to some forty federal agencies during the summer of 1968.'

Each federal agency surveyed was asked the following initial
question:

1. What programs dors your department or agency administer

a. that are directed primarily at the economically underprivileged
segments of our society, or,

b. although not directed primarily at such segments, may have a
very substantial impact on them?

Most agencies listed those programs under their respective juris-
dictions reasonably falling within the above categories. However,
the questionnaire responses indicated that a few agencies admin-
istering programs in class (1) (b) above do not recognize that
they are in fact doing so. This is, even though they are ad-
ministering some programs having a very substantial impact on
the poor, a significant number of agencies replied to question
(1) (b) by stating that they administered no programs of that
type.- In addition, a few agencies that did list some programs

' The following agencies responded to the questionnaire which was distributed as a survey of
the RulemakinK Committee of the Administrative Conference of the United States : Department
of Justice ; Civil Service Commission ; Post Office Department ; Department of Agriculture ;
Department of the Interior: Department of Health, Education, and Welfare: Tennessee Valley
Authority : Department of Labor ; Office of Economic Opportunity : Equal Employment
Opportunity Commission ; Federal Power Commission : United States Commission on Civil
Rights : Small Business Administrat'on : National Capital Planning Commission : Federal
Communications Commission : Securities and Exchange Commission : Foreign Claims Settlement
Commission of the United States : National Science Foundation ; National Advisory Council on
the Education of Disadvantaged Children ; Smithsonian Institution ; President's Council on
Youth Opportunity : Department of State ; Washington Metropolitan Area Transit Authority ;
Department of the Treasury ; General Services Administration ; Appalachian Regional
Commission; Interstate Commerce Commission; Farm Credit Administration; Federal Reserve
System ; Veterans Administration ; Federal Home Lxjan Bank Board ; Department of Commerce :
Department of Housing and Urban Development.

-The following examples are illustrative:

"Concerning the study that your Committee on Rulemaking is making of participation of the
poor in agency rulemaking . . . [the U.S. Civil Service Commission is] declining to attempt to
fill out the questionnaire because we do not believe it is applicable to us." Yet that body makes
the general rules for government hiring and classification of employees, and it administers
nondiscrimination in government employment [under Exec. Order No. 11,246, 30 Fed. Reg. 12319
§§ 103, 104 (1965)].

"Please be advised that the General Services Administration does not appear to have programs
of the nature contemplated by the Survey of Participation of the Poor in Agency Rulemaking."
Yet many of the programs administered by this agency undoubtedly fit within class (1) (b) of
the question in the text since the manner and conditions under which the national government
purchases and sells supplies and property and cares for and constructs federal buildings
undoubtedly has a substantial impact on the poor.

"This is in reply to your letter of July 18 which requested responses to a survey questionnaire
dealing with programs administered by [the Post Office] Department which are directed at or
have a very substantial impact on the jioor. The Department does not administer any such
programs. Our primary activity, moving the mail, and our programs to effect that end, are not
directed at any economic group and do not have the impact on the poor contemplated by your
questionnaire." Yet the Post Office is one of the largest actual or potential government
employers of "poor" people. Its part-time hiring during Christmas, for example, has a
substantial impact on the poor. In addition, whether it delivers mail on five or six days a week
may have a qualitatively greater impact on the poor than on others. If the poor cannot get

82 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES

having a substantial impact on the poor neglected to list all of
their programs fitting into that category.^ If the agencies in-
volved do not understand that some of their programs have a
substantial impact on the poor, or cannot determine which of
their programs have that effect and which do not, the interests
of such persons are inadequately represented in rulemaking for
those programs.

The questionnaire also asked the agencies surveyed :

5. Does your agency now attempt to ascertain the views of poor and
economically underprivilegd persons in respect to rules and policies
proposed to be issued to implement the programs listed in response to
question 1 above? If so, please describe in detail the procedures you use
in each program to ascertain these views.

About one third of the agencies claiming to administer programs
substantially affecting the poor indicated that they had not previ-
ously attempted to ascertain the views of economically under-
privileged persons with respect to rules and policies proposed by
the agencies to implement those programs. A typical response of
this kind stated that "We do not now attempt to ascertain the
views of the poor and economically underprivileged, as such." *

their welfare or social security checks on time because mail is delivered only five days a week,
they have no other resources to fall back on.

^ The following examples are illustrative.

While the Department of I-abor lists enforcement of Title VI of the Civil Rights Act of 1964
[42 U.S.C. § 2000 (1964)] implemented by regulations found in 29 C.F.R. pt. 31 (1968), it does
not list its role as implementor of Executive Order No. 11,246, 30 Fed. Reg. 12319 (1965). The
former program is to effectuate the policy of the Civil Rights Act of 1964 that no person shall,
on the ground of race, color, etc. be excluded from participation in or discriminated against in
any program receiving federal financial assistance from the Department of Labor, while the
latter is a program administered by that Department to assure nondiscrimination in employment
by government contractors and subcontractors. In addition, while the Department of Labor does
list the Farm Labor Contractor Registration Act of 1963, 7 U.S.C. § 2041 (1964), implemented
by regulations found in 29 C.F.R. pt. 40 (1968), it does not list as a program substantially
affecting the poor the hracero program partially administered by that department under 20
C.F.R. § 602.10 (1968). The former program requires certain persons to obtain certificates of
registration prior to performing any activities which constitute engagement in farm labor
contracting, while the latter requires that the Secretary of Labor certify certain facts as a
condition for the admission of aliens to perform certain temporary agricultural or logging
industry services.

While the Department of Agriculture lists many programs it administers having a substantial
impact on the poor it does not list the price support and production stabilization programs
administered by the Commodity Credit Corporation and the Agricultural Stabilization and
(Conservation Service. Also omitted from the Department's enumeration of its programs having
a substantial impact on the poor are the Rural Electrification Administration programs and
Federal Extension Sei-vice programs. See 1968-69 Uniteh) States (Jovernment Organization
Manual 273-77, 283, 294.

■• Veterans Administration. Responses of a significant number of other agencies were similar.
The following examples are illustrative:

The Federal Home Loan Bank Board reported that it "makes no special provision to secure
the views of poor persons." The Tennessee Valley Authority simply answered question 5 "No."
"The [Federal Power] Commission does not make an overt effort to solicit the advice of the poor
as such . . . ." "The Department [of Transportation] does not, by regulation, specifically,
attempt to ascertain the views of the poor in regulatory activities listed in paragraph 1." "The
views of poor and economically underprivileged persons have not been actively solicited [by the

REC. 5. REPRESENTATION OF POOR 83

About two thirds of the agencies reporting that they adminis-
tered programs substantially affecting the poor stated that they
had made some efforts to ascertain the views of those people
with respect to rulemaking for such programs. In most cases,
however, the efforts described are totally inadequate for the pur-
pose. They are frequently haphazard, unsystematic, and sporadic.^
The means used have sometimes been so informal and unstruc-
tured as to achieve the result only incidentally and accidentally
if at all.'' Furthermore, agencies frequently seem to have sought
information about the views of the poor from persons who are
neither poor nor reliable spokesmen for the mass of the poor
affected by those agencies' actions." The answers to question 5
also indicate that very few of those agencies stating that they
attempt to ascertain the views of the poor make any consistent

Federal Reserve System] in respect to rules and policies regardinK the proEram mentioned in lb,
above . . . ." "There is no regular procedures in effect whereby the views of the poor are
obtained in connection with the issuance of policies and procedures"' of the Department of
Housing and Urban Development.

Many of the above responses do, however, go on and assert specifically that this does not
mean that the interests and views of the poor are ignore<l with respect to that portion of the
agency's policy-making which affects them.

'The following examples are illustrative:

For three out of the five programs reported by the Small Business Administration as having a
substantial impact on the poor, it answered question '> "No." While it claimed to make an effort
to ascertain the views of the poor with respect to some programs, the Department of Health,
Education and Welfare reporte<l that it did not make a specific attempt to solicit regularly the
views of the poor as such with respect to rulemaking for the Old Age Survivors and Disability
Insurance Programs and the Social and Rehabilitation Services Programs. The Department of
Agriculture reported that it "has not heretofore, on its own initiative attempted to ascertain
the views of poor and economically underprivileged persons in respect to rules and policies
proposed to be issued to implement the listed ffood distribution] programs," but it has
attempted to do so with respect to programs administered by the Farmers Home Administration.

'For example, the Equal Employment Opportunity Commission reported that "[olur agency
ascertains the views of economically underprivileged persons in respect to rules and policies
informally insofar as these views are elicited in the course of investigation of charges of
unlawful practices."

' For example, the Department of Agriculture reporte<l that it ascertains the views of the
poor with respect to programs administered by the Farmers Home Administration (FHA) from
its Technical Action Panels, County FHA Committees, and State FHA Advisory Committees. Yet
these bodies rarely if ever have members who are poor persons themselves, that is, members "of
the poor" ; and these bodies rarely have adefiuate representatives of the poor's views as such
among their membership. Some Technical Action Panels may have the Directors of local
Community Action Program (CAP) organizations and welfare agencies among their number.
But these officials do not necessarily represent the views of the mass of the poor since their
CAP or welfare agency positions are controlled by the establishment, they are not themselves
poor, and frequently their outlook may be middle-class- and establishment-oriented. This is
especially true with respect to the Directors of CAP programs since the Green Amendment, 42
U.S.C. § 2790 (Supp. Ill, 196.5-1967), amending 42 U.S.C. § 2790 (1964).
In addition, the Department of Health, Education, and Welfare reported that:

The Social Security Administration [with respect to Medicare] consults with the Health
Insurance Benefit Advisory Council, a panel of 19 persons outstanding in fields related to
hospital, medical and health activities, on matters of general policy and in the formulation
of regulations. The panel includes representatives of public and private medicine,
hospitals, nursing homes, health insurance, labor, and the general public. The poor, as
such, are not represented on the panel — the public, as such, is represented on the panel.
Obviously, attempts to ascertain accurately the views of the poor from these people are not
likely to be very successful.

84 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES

efforts to do so through means specifically and specially tailored
to accomplish that result in a reliable way. For example, some
agencies claimed that they attempted to ascertain the views of
the poor by issuing general public invitations to all interested
people, including the poor, to submit their views upon particular
rules proposed by the agency.**

Responses to a further question are also instructive because
they indicate that, in fact, the interests of the poor have rarely
had any continuous and systematic affirmative representation in
the federal rulemaking process. That question asked :

7. Have any particular g-roups or organizations intervened or other-
w^ise participated for the purpose of representing the views of the poor
in rule-making or in proposing rules in connection with any of these
programs? If so, please identify the groups or organizations and indi-
cate the frequency of such participation and the method by which each
group or organization has participated.

About half of the responses from agencies acknowledging that
they administered programs substantially affecting the poor in-
dicated that no particular groups or organizations had inter-
vened or otherwise participated in their rulemaking for this
purpose." An additional number of respondents indicated that
outside organizations had participated, on behalf of the poor, in
agency rulemaking for some programs substantially affecting
such people, but not at all in the rulemaking for other such
programs."

According to the responses received to another interrogatory
contained in the questionnaire, the present situation is not likely

* For example, the Department of Labor reported :

When notice of proposed rulemakinpr is Riven, the Department of Labor invites every

interested person to submit written data, views or argument, and, when an opportunity is

provided for oral presentations, to participate orally. Special notice is customarily given

labor unions where interest of their members is involved.

And the Federal Trade Commission reported that it attempts to ascertain the views of the poor

"through building up of public records contributed by members and representatives of all sectors

of the economy and through the holding of public hearings in some cases." According to the

questionnaire responses, no special effort seems to be made by these two agencies to notify the

poor or solicit their views as distinguished from the public generally. Certainly the unions are

not adequate representatives of the poor's interests before the Department of Labor.

"For example, the Department of Transportation reported that: "No particular groups have
intervened or otherwise participated for the purpose of representing the views of the poor in
rulemaking in this Department" ; the Equal Employment Opportunity Commission reported that
"[n]o group or organization has formally intervened or participated for the specific purpose
of representing the views of the poor in rulemaking" ; and TVA simply answered question 7,
"No."

^* For example, the Small Business Administration reported that no groups participated to
represent the poor in rulemaking for any of its programs except the Economic Opportunity
Loan Program, where many groups have participated for this purpose. Similarly, the
Department of Agriculture reported that for food distribution programs, some groups had
participated, but for Farmers Home Administration programs, "[t]he answer to this question is
in the negative."

REC. 5. REPRESENTATION OF POOR 85

to change very much without external stimulation. The agencies
were asked:

6. Does your agency contemplate using any particular means not
utilized at the present time by it to insure that the views of the poor are
adequately ascertained prior to the promulgation of any rule intended
to implement or affect these programs? If so, please explain in detail.

A number of very important agencies from the point of view of
the poor indicated that they intended to institute new and more
effective means by which to ascertain the views of the poor with
respect to rulemaking substantially affecting those people." How-
ever, most agency respondents indicated that they had no such
plans, and that they were satisfied with their present efforts in
this regard.^-

In addition to the responses gleaned from the questionnaire
distributed to the various federal government agencies, other
evidence directly or indirectly supports the proposition that the
interests of the poor have had inadequate representation in fed-
eral rulemaking important to them. Officials of a number of
major organizations purporting to represent some segment of the
poor were questioned.^' They indicated that poor people's organi-
zations had only rarely participated in federal administrative
rulemaking, and then only very recently and on an ad hoc basis.
The reasons most often cited for the failure of the poor to
participate more extensively in that process were their lack of
knowledge that rules of interest to them were being considered,
their lack of money to finance such participation, their lack of
knowledge of the means by which they could participate, and the
relevant agencies' lack of interest in ascertaining their views.

The representatives of those poor people's organizations ques-
tioned during this study also made another significant point.

"The Department of Health, Education, and Welfare, the Department of Agriculture (but
only in regard to consumer food programs), and the Department of Labor reported such plans.

"For example, the Veterans' Administration stated that: "fwle have no plan at present to
use any particular means other than those explained above, to insure that the needs of the poor
veterans, as such, are ascertained prior to the promulgation of rules." The Equal Employment
Opportunity Commission reported that: "[o]ur agency does not at present contemplate
utilization of other means to insure that the views of the poor are ascertained prior to
promulgation of rules." And the Small Business Administration and Tennessee Valley Authority
both simply replied "No" to question 6.

" Among the people questioned, either in person or over the telephone, were Clarence Mitchell,
NAACP ; Cenoria Johnson, Urban League ; Tim Sampson, National Welfare Rights
Organization ; Philip Ryan, in the offices of Marian Wright, Counsel to the Poor People's
Campaign ; Steven Rosenfield, Citizens Advocate Center ; Norman Kurland, Citizens Crusade
Against Poverty ; and Larry Silver, Neighborhood Legal Services Program. All of the above are
located in Washington, D.C. Also questioned were Gary Bellow of the California Rural Legal
Assistance Program, McFarland, California ; Junius Allison of the National Legal Aid and
Defender Association, Chicago ; and Leroy Clark, formerly of the NAACP Legal and Educational
Defense Fund of New York.

86 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES

They insisted that one of the most important deficiencies of the
federal administrative process is the inability of economically
underpriviledged persons to have their views adequately repre-
sented in the formulation of policies affecting them. In this con-
nection it should be noted that the Poor People's Campaign of
1968 specifically and repeatedly demanded that there should be
greater consultation with the poor and greater consideration of
their views in the formulation of administrative regulations af-
fecting them.^* In responding to thoese demands, some federal
agencies tacitly admitted that the poor had been inadequately
represented in the formulation of administrative policy. Those
few agencies stated that they intended to adopt new means to
enhance the poor's participation in that process.^'"' This fact cor-
relates with the previously reported responses to question 6 of
the questionnaire.

The ofl^cial agency responses to some of the specific substantive

" For example, the Poor People's Campaign demanded of the Department of Labor
"[i]nvolvement of the poor in decision making about manpower training and other employment
programs" ; of the Office of Economic Opportunity "that the O.E.O. reorder its priorities so that
the consumers of services be involved in the policy making ... of those programs which
continue to be administered by the agency" ; of the Department of Health, Education, and
Welfare (1) "that the Department of Health, Education and Welfare require of grantees that
poor people be included in planning bodies under the comprehensive health planning and
Medicare programs which have provisions for citizen membership on their planning boards"
(2) that HEW "[e]stablish a national structure and mechanism which provides for continuous
input by poor black, brown, and white people in the design, development, operation and
evaluation of all federally funded education programs" and (3) that HEW "requir[e] that
[welfare] recipients be involved in making policy and program decisions about how the program
will be carried out by the states and localities."

The quoted demands may be found in the mimeo sheets entitled "Statement of Demands for
Rights of the Poor Presented to Agencies of the U.S. Government by the Southern Christian
Leadership Conference and Its Committee of 100, April 29-30, May 1, 1968" presented by the
Poor People's Campaign to each of the above agencies.

'^ For example, note that the Department of Health, Education and Welfare replied to the
Poor People's Campaign by stating that (1) "We will increase our efforts to involve persons
representative of the poor in our activities and on Advisory Committees," (2) "we will
establish, and require each state to establish, some vehicle for obtaining the advice of the poor,
especially recipients in program and policy development," and (3) "the Commissioner [of
Education] and members of his staff will meet with a group of persons broadly representative
of the poor and arrange for continued participation of such a group with respect to all
federally funded education programs in the Office of Education" ; the Department of Labor
responded by stating that "[a]dditional efforts to reach and to communicate with the poor
must be made so that their needs are understood" ; and the Office of Economic Opportunity
responded to the Poor People's Campaign by stating that "[t]he Community Action Program
is instituting a system by which drafts of major policy instructions will be circulated for
comment to all grantees and national organizations interested in community action before be-
coming official. Representatives of the poor on C.A.A. boards and advisory counsels shall thus
have a chance to discuss policy and make their views known to O.E.O before the policy is
formally adopted. . . . The O.E.O. will involve the poor as consultants in O.E.O program
development."

The above quotations may be found in the official responses from each of the above agencies
to the demands of the Poor People's Canlpaign. Letters to the Reverend Ralph Abernathy from
Wilbur Cohen, Secretary of Health, Education, and Welfare May 25, 1968, and June 18, 1968 ;
from Willard Wirtz, Secretary of Labor, dated May 27, 1968 ; from Bertram Harding, Acting
Director of OEO, undated and titled "Office of Economic Opportunity Response to Poor People's
Campaign."

REC. 5. REPRESENTATION OF POOR 87

demands made by the Poor People's Campaign of 1968 may also
constitute some evidence that the poor have been inadequately
represented in the federal rulemaking process. After examining
objections raised by the poor, a number of agencies admitted that
several of their substantive policies questioned by that Campaign
were inadequate and should be changed.^" This indicates that
these agencies may not have been properly apprised of the rel-
evant interests of poor people when the administrative decision
makers first formulated the policies involved. A few officials have
privately admitted that this was the case in some of those situ-
ations. (Of course, in other of those situations the decision makers
may have been adequately apprised of the relevant interests of
the poor and simply made unwise policy decisions. High quality
representation of the poor's interests in rulemaking cannot in-
variably assure that administrators will make wise decisions!)

Similarly, a number of recent lawsuits may also attest to the
inadequate representation accorded the poor in the federal rule-
making process. These suits indicate, in one way or another,
that certain federal administrative action or inaction did not
properly protect the interests of poor people.^' A possible implica-
tion may be that the interests of the poor were so inadequately

^^ For example, in response to a request for more stringent enforcement of fair employment
by federal Kovernment contractors, the Department of Labor stated that it "will issue new
Kuidelines requiring firms holding government contracts to use hiring and promotion tests
that are racially culturally fair." It also stated that it "will issue new regulations to tighten
the Labor Department equal opportunity programs," expanding coverage from first level to
all levels of subcontractors and requiring positive action programs from contractors. Letter
from Willard Wirtz, Secretary of Labor, to the Reverend Ralph Abernathy May 27, 1968.
Similarly, in response to a demand that health services be made available to poor through
comprehensive neighborhood health centers, the Department of Health, Education, and Welfare
responded that it will pool funds from different sections of HEW and other agencies to support
comprehensive health services in poor urban and rural areas. And in response to a demand
that only declarations of facts be required of recipients under federally financed state welfare
programs the Department promised to institute such a system. For both of the above HEW
replies, aee letter to the Reverend Ralph Abernathy from Wilbur Cohen, Secretary of Health,
Education, and Welfare May 25, 1968. Note also that of the five high-priority changes in the
size, shape, and location of food distribution programs demanded by the Poor People's Cam-
paign of the Department of Agriculture, four were at least partially met. Des Moines Register,
Nov. 16, 1968, at 8, col. 4, .5 : Wall St. J., Dec. 12, 1968, at 2, col. 3.

"See, e.g.. King v. Smith, 392, U.S. 309 (1968), holding that the Alabama substitute-father
regulation (which reciuires disqualification of otherwise eligible children from federally sup-,
ported aid to dependent children if their mother cohabits with a man not obligated by Alabama
law to provide support) defines "parent" in a manner inconsistent with the national Social
Security Act and is therefore invalid with respect to the program. 392 U.S. at 333 n.4. To the
extent HEW approved any man-in-the-house provision in state plans that conflicted with the
Social Security Act that approval was improper because it was inconsistent with the con-
trolling federal act. After King v. Smith, HEW issued new regulations outlawing such substi-
tute-father rules. 33 Fed. Reg. 11290. In Thorpe v. Housing Authority, 386 U.S. 670 (1967),
a tenant in federally assisted low rent public housing was given notice of eviction without
explanation after being elected president of a tenant's organization. The Supreme Court
vacated the judgment below affirming eviction and remanded for a reassessment of that judg-
ment in light of directive issued by the Department of Housing and Urban Development after
grant of certiorari requiring that no tenant be given notice to vacate without reasons for
eviction and a chance to explain.

88 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES

represented in those agencies' policymaking processes that a law-
suit was required to induce proper protection for the economically
underprivileged.

To all the above evidence may be added the fact that many
scholars studying the poverty problem agree that the interests
of the poor are inadequately represented in the rulemaking proc-
ess. Moreover, in some situations the administrative rules or
lack of administrative rules implementing a particular program
affecting the poor treat the interests of those people in such a
way that the poor were not likely to have been properly rep-
resented in their formulation.^^ It should also be recalled, as noted
previously, that administrative policy makers almost always have
middle-class backgrounds and therefore are not usually personally
familiar with, or natural advocates for, the interests of the poor.

C. Some Definitions

In light of the above evidence, a number of specific recommen-
dations with respect to representation for the poor in federal
rulemaking seem appropriate. To assure precision, several terms
utilized in the recommendation and in the remainder of this
Article deserve definition. The words "poor" and "economically
underprivileged" are used as synonyms. They refer to that group
in our society unable to represent adequately its collective inter-
ests in federal rulemaking because its members lack the individual
or organizational financial resources to do so. Consistent with
this definition some groups of individuals may be poor or eco-
nomically underprivileged in relation to certain rulemaking and
not in relation to other rulemaking. This Article and the accom-
panying recommendations assume that people will be treated as
poor only in the rulemaking situations where they are unable to
represent themselves adequately because of their financial in-
capacity. Depending on the circumstances it is possible, therefore,
that those who are deemed poor for present purposes may vary
to some extent with the particular rulemaking involved.

The "rulemaking" referred to is that defined by section 2(c)
of the Federal Administrative Procedure Act (APA).^« "Rule-
making" therefore means "agency process for the formulation,
amendment or repeal of a rule." The word "rule" refers to "the
whole or any part of any agency statement of general or partic-
ular applicability and future effect designed to implement, in-

^^See, e.g.. Note, Welfare's "Condition X". 76 Yale L.J. 1222 (1967).

"5 U.S.C. § 1001(c) (1964), as amended, 5 U.S.C. § 551(5) (Supp. HI. 1965-1967).

REC. 5. REPRESENTATION OF POOR 89

terpret, or prescribe law or policy or to describe the organization,
procedure, or practice requirements of any agency. . . ." ^°

D, The Precise Scope of the Task

The purpose of the recommendations is to assure that the
interests of the poor in our society are adequately represented
in all federal rulemaking having a substantial impact on them.
In doing so, the primary concern is the ability of the economically
underprivileged to participate in rulemaking both for those pro-
grams dii-ectly aimed at them and for those which, although not
directed at the poor, substantially affect them as a separate
group. However, the need for adequate poor people's representa-
tion in rulemaking extends beyond this. Rulemaking for some
programs thought not to concern the poor and usually not af-
fecting the poor may, on occasion, have a large impact on them.
Consequently, an adequate remedy must include a mechanism for
monitoring, on behalf of the poor, all federal rulemaking; and it
must assure, insofar as practicable, representation for the poor in
all rulemaking having a substantial impact on them, even though
that rulemaking occurs in a particular program not normally
having that kind of effect. The need to secure representation
for the poor for all rulemaking of this sort is especially critical
when it is remembered that rulemaking is frequently not an
on-going process. It may be a one-time affair resulting in a rule
to last for the indefinite future. Failure to assure adequate repre-
sentation for the poor's interests in all rulemaking having a
substantial impact on them as a separable group may, therefore,
have long-term rather than short-term deleterious consequences
in many situations.

It would be simple to formulate a nearly perfect solution to
the problem under consideration if the poor were a monolithic
or homogeneous group with its own democratically elected rep-
resentative structure which could be called upon to articulate
the particular interests of the poor wherever they are affected.
The fact is that no organization, group, or individual can right-
fully assert that it speaks for all the poor of this country in any
truly democratic or representative sense. The poor are too hetero-
geneous and diverse ; their interests too disparate and f raction-
alized. Even the sum total of all groups or organizations pur-
porting to represent the interests of the American poor do not
do so in any really democratic sense since most poor people are
not members of any such group or organization. The interests

^5 U.S.C. § 1001(c) (1964), as amended, 5 U.S.C. § 551(4) (Supp. III. 1965-1967).

90 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES

of the majority of poor may also sometimes diverge from the
views of the many organized groups purporting to speak for
some segment of them or for all of them. In addition, the leader-
ship of some so-called "poor people's groups" may fall into the
hands of persons who are in fact out of touch — or simply not
concerned — with reflecting the views and promoting the welfare
of the mass of the economically underprivileged. For these rea-
sons, the creation of a truly representative agent to articulate
and represent the heterogeneous interests of the poor is both
impractical and infeasible. Consequently, the most satisfactory
means of assuring adequate representation for the poor in federal
rulemaking substantially affecting their interests will necessarily
be imperfect. It also may have to be, in at least one sense, arti-
ficial and imposed from above.

Efforts to secure adequate representation for the economically
underprivileged in all federal rulemaking having a substantial
impact on them will have to move on two fronts to be successful.
An attempt must be made to assure that federal agencies making
rules of this kind independently seek to ascertain from the poor
their views with respect to such rules. In addition, an attempt
must be made to help the poor obtain affirmative representation
for their interests in the rulemaking process. That is, some means
must be devised by which to assure that these people have a
competent, consistent, and aggressive advocate for their interests
before federal agencies. Within the limits set by this two-pronged
approach, a desirable solution should also be feasible — that is,
realistically achievable; should take account of the fact that the
interests of the poor needing representation may often be frac-
tionalized and diverse; should be workable in an everyday, op-
erative sense; and should be as economical as possible. Moreover,
such a solution should be practical in the sense that the positive
contribution it may make to the administrative process should
overbalance any negative impact it may have on that process or
other societal values. A desirable resolution of the problem under
consideration should also make it as obvious as possible to the
poor that their views will be adequately represented in rule-
making. This particular requirement may not directly enhance
the proper functioning of the administrative process as such. It
may, however, help to eliminate that portion of the poor's distrust
of and dissatisfaction with government which stems from their
perception that officialdom does not adequately consider their
views when it makes policy affecting them.

REC. 5. REPRESENTATION OF POOR 91

II. Assuring Affirmative Agency Action To Ascertain
THE Views of Poor People

A. Generally

Officials responsible for promulgating rules substantially af-
fecting the economically underprivileged segment of our society
should, where feasible, increase their existing efforts to ascertain
independently the views of poor people. They should also devise
additional effective means by which to do so. This approach
stresses the ability of the several agencies involved to develop
and utilize affirmative procedures for obtaining, through direct
and continuing contact with the poor themselves, the specific in-
formation that they should consider when they formulate their
programs affecting the poor.

There is an analogy in Budget Bureau Circular A-85, which
is entitled "Consultation with Heads of State and Local Govern-
ments in Development of Federal Rules, Regulations, Procedures
and Guidelines." This document orders federal agencies to follow
certain procedures geared to assure that there is adequate con-
sultation with the heads of state and local governments prior to
the promulgation of rules for the implementation of specific
kinds of federal programs vitally affecting them. The Defense
Production Act of 1950 also provided that "[a]ny rule, regula-
tion, or order, or amendment thereto, issued under authority of
this Act shall be accompanied by a statement that in the formula-
tion thereof there has been consultation with industry representa-
tives, including trade association representatives, and that
consideration has been given to their recommendations. . . ." ^^
Similarly, federal agencies should follow procedures with respect
to rulemaking that will assure, where feasible and practicable, in-
dependent agency efforts to ascertain directly from the poor
their views with respect to proposed rules substantially affecting
them.

B. Some Specific Suggestions

Agencies administering programs of concern to the poor should
be urged to hold formal hearings — that is, oral public hearings —
on proposed rules in close geographic proximity to the poor people
affected. They should also be urged to obtain witnesses and solicit
written views from among the affected poor and organizational
representatives of the affected poor. Federal agencies should use
special notice and hearing arrangements tailored to meet the

Act of Sept. 8, 1950, ch. 932, § 709, 64 SUt. 819.

92 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES

peculiar problems of economically underprivileged persons in
order to assure their effectiveness in accurately and successfully
obtaining the views of such people. As an illustration, publication
of a proposed regulation and notice of a public hearing in the
Federal Register may constitute adequate notice for middle and
upper income Americans v^hose agents or group representatives
read that periodical, but it is usually inadequate by itself to ap-
prise the poor. To faciliate affirmative agency action to ascertain
the views of the poor, increased use of field surveys should also
be encouraged. In addition, or as an alternative to some of the
above suggestions, agencies should hold very informal confer-
ences with the poor in their own neighborhoods in order to dis-
cuss with them contemplated rulemaking affecting such persons'
interests.

Agencies should also be urged to pay certain of the personal
expenses of economically underprivileged witnesses in rulemaking
hearings where that would help assure adequate representation
for the poor. In this way the federal agencies may facilitate the
appearance of an adequate number and variety of poor people's
representatives in such proceedings. If economically underprivi-
leged individuals must incur transportation, meal, or babysitting
costs Jn order to testify on behalf of the poor, of if they must
lose a day's wages, they should be reimbursed. Unlike the more
affluent members of our society, poor people cannot afford to
finance the extra costs involved in representing their own in-
terests. At the present time most agencies are probably unable
or unwilling to pay such expenses incurred by underprivileged
persons seeking to represent the interests of the poor in rule-
making hearings. In order to remove any doubts as to their
authority, federal agencies should be expressly empowered, in
their discretion, to pay the basic personal expenses incurred by
poor persons acting in such a capacity.

Each agency administering programs with a high impact on
the poor should also be urged to constitute, where practicable, a
formal advisory committee to apprise the agency of poor people's
interests that should be weighed in the operation of its programs.
These committees should be composed of persons who are them-
selves economically underprivileged, or the direct and close repre-
sentatives of such persons. The committees should be continually
kept informed of those activities of their respective agencies that
specially concern them; and they should be consulted for their
views before the agency makes any rules substantially affecting
the interests of the economically underprivileged segment of our
society. All expenses incident to the operation of such advisory

REC. 5. REPRESENTATION OF POOR 93

bodies should be borne by the respective agencies. "Regulations
for the Formation and Use of Advisory Committees" already
exist.'-'- These might be revised, expanded, and reoriented for this
purpose.

In the future, the Administrative Conference of the United
States should monitor the extent to which federal agencies actu-
ally do institute specific procedures like those just discussed.
Government officials must be induced to increase their own af-
firmative efforts to ascertain the views of the poor with respect
to rulemaking which affects them substantially. If the Conference
finds that the recommendations urging voluntary agency action
in this regard are not adequately affecting official behavior pat-
terns in practice, it might then recommend that agencies be re-
quired to follow certain of the above specific procedures with
respect to particular programs.

Although federal agencies might, if necessary, be required to
follow some of the procedures outlined above in specific programs
or situations, there are a number of reasons why federal agencies
should not be required to follow certain of those procedures in
every case where they engage in rulemaking substantially af-
fecting the poor. These procedures may be completely superflu-
ous in a number of cases because the views of the poor are
unmistakably clear and a matter of public record. In addition,
many of the specific procedures outlined as possible means to
induce affirmative agency ascertainment of the poor's interests in
agency rulemaking may be very impractical. The agencies have
an undisputed need to conduct their affairs inexpensively, simply,
conveniently, flexibly, and expeditiously. Requirements of the sort
outlined above may be unusually difficult to draft and administer
because of the peculiar problems in defining precisely those whose
views the agency must solicit or appoint as representatives of
the poor, when or where oral hearings or conferences must be
held or field surveys taken, and the like. Whether an oral hear-
ing should be held with respect to a certain proposed rule,
precisely where and when it should be held, who exactly should
be invited to testify, and whether a field survey should be made
are all judgment questions. Someone, probably the rulemaking
agency, must exercise some discretionary judgment. And to re-
quire useless hearings, conferences, or field surveys, endless lines
of repetitive and inarticulate witnesses, and the like, would be to
interject the worst kind of mischief into the administrative
process, hamstringing rather than improving it.

=2 Exec. Order No. 11.007, 27 Fed. Reg. 1875 (1962).

94 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES

However, if federal agencies vi^ill voluntarily follow the pre- j
vious suggestions in all those situations where they are feasible, '
practicable, and necessary to assure that officials are fully in-
formed about the relevant interests of the poor, the agencies
will help solve the problem under consideration. The proposals
outlined in this section have the advantage of assuring self-
starting and independent affirmative agency action to secure in-
formation directly from the poor concerning their position with
respect to rulemaking substantially affecting them. An effective
pipeline from the poor to those who are responsible for rule-
making decisions could result. The fact that the government
would bear the sole or primary financial burden for this mode of
assuring consideration of the poor's interests in rulemaking also
enhances its attractiveness and effectiveness.

C. The Inadequacy of Affirmative Agency Efforts

Procedures to assure self-initiated affirmative official action to
ascertain from the poor their views with respect to agency rule-
making will, if sound in their details, undoubtedly be helpful;
but such procedures are entirely inadequate solutions for the
problem at hand in at least one major respect. They do not com-
pletely compensate for that which the poor currently lack. Eco-
nomically underprivileged people do not have the resources neces-
sary to assure a technically sound and consistently available
articulate presentation of their views concerning rulemaking to
the appropriate agencies. Those segments of our society with
adequate economic resources have long employed legal counsel—
with their special technical proficiencies, knowledge, and skill as
advocates— for these purposes. By the use of lawyers' professional
abilities, the well-financed have assured that the kind of repre-
sentation actually afforded their interests before government
policy makers is qualitatively high, and much more effective than
it could possibly be otherwise.

The poor are entitled to, and must have in order to make their
interests known effectively, both the quantity and quality of
representation in rulemaking before federal agencies that com-
mercial corporations and labor unions consistently utilize. That
necessitates furnishing the poor, in one way or another, with
legal counsel for this particular purpose. Because the poor lack J
the personal and organizational resources to hire such skilled, I
persistent, and knowledgeable help, affirmative agency efforts of |
the kind discussed above, although useful, would still result in
qualitatively inadequate representation in rulemaking for the »

REC. 5. REPRESENTATION OF POOR 95

economically underprivileged segment of our society. The reason
for this is that existing sources of public and private legal aid
to the poor, such as legal aid and public defender programs, do
not usually provide the economically underprivileged segments
of our society with representation in rulemaking. These programs
are primarily, if not exclusively, concerned with serving the in-
terests of individual poor clients in adjudicative or potentially
adjudicative situations.

III. A Clearinghouse Coordinator?

The poor might obtain the quantity and quality of represen-
tation they need for their views in federal rulemaking if a well-
financed clearinghouse-coordinator organization was created.
Such an organization could systematically furnish all poor peo-
ple's groups in this country with information concerning existing
or proposed federal administrative regulations having a substan-
tial impact on the poor. In addition, it could encourage and co-
ordinate participation in federal rulemaking by organizations
representing the economically underprivileged. Where necessary,
this entity could also finance participation in rulemaking by vari-
ous poor people's groups. That is, the clearinghouse coordinator
might make conditional limited-purpose grants to poor people's
organizations so that they could individually hire personal legal
counsel to represent their views in a particular rulemaking mat-
ter. Such a clearinghouse coordinator would not itself attempt
to play any direct role as an advocate in the rulemaking process.
It would not act as a separate representative of the poor. An
organization of this type could be financed by private contribu-
tions, government grants, or both, and, it could be constituted
as an independent private body under the control of all of its
constituent users in order to assure the maximum satisfaction of
its clients.

Utilization of this kind of clearinghouse coordinator has sev-
eral advantages as a solution to the problem of improved repre-
sentation for the poor in federal rulemaking. It would encourage
and facilitate more frequent and continuous representation of
poor people's interests in the rulemaking process by organiza-
tions and groups representing some segment of the economically
underprivileged. The clearinghouse coordinator might also result
in representation for more of the many divergent and disparate
interests present in that group in our society loosely character-
ized here as "the poor" than would otherwise be the case. In
addition, the existence of such a body might induce a better and

96 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES

more accurate presentation of the views of the poor on many
matters than might be the case v^ith some other solutions. This
is true because the source of the views and the representation of
those views would be relatively close to the poor themselves.
Since this solution would provide poor people's groups with funds
to engage their own separate and personal counsel for the pur-
poses of representation and advocacy in rulemaking proceedings,
it would assure that the views of those organizations are accurate-
ly, articulately, knowledgeably, and aggressively presented to
the agencies in question.

Still, such a clearinghouse-coordinator organization is probably
an inadequate and inefficient solution to the problem at hand.
It assumes that existing organized groups purporting to represent
the poor can or will do an adequate job of protecting those
people's interests with respect to federal rulemaking if such bodies
are kept informed of the facts, their efforts are coordinated, and
sufficient financing is made available to them. This is a question-
able assumption, although admittedly it is hard to prove or dis-
prove entirely on the basis of undisputed evidence. Existing poor
people's organizations have sometimes been aware of proposed or
existing rules of special concern to the poor generally, and yet
have failed to act.=-^ In many of these instances, their failure can-
not be attributed entirely to a lack of organizational resources.

It should be reiterated that most poor people do not belong to
organizations dedicated to protecting and advancing their inter-
ests ; and the views of "poor people's groups," or of the controlling
leadership of such groups, may frequently be out of touch with,
or divergent from, the interests of the mass of the poor. The
clearinghouse-coordinator proposal will not, therefore, consistent-
ly assure adequate representation in rulemaking for the collective
interests of the poor as a general group. The device may assure
representation in rulemaking only for the views of organized
poor people's groups, or for the views of the leadership class
of those groups. Depending on the specific case, that kind of rep-
resentation may or may not be adequate to protect the interests
of the mass of the poor people in this country.

The grant-financed efforts of numerous poor people's groups,
each seeking to represent separately the interests of the eco- ''
nomically underprivileged in federal rulemaking, may also be
unduly duplicatory and therefore wasteful and unnecessarily

=' The Department of Agriculture's Commodity rHstribution and Food Stamp programs for
the poor are an example. Although poor people's organizations were aware of the existence of
those programs and the Department rules under which they were operated, they did not seem
to take any active interest in those programs until the last year or so.

REC. 5. REPRESENTATION OF POOR 97

burdensome to the administrative process. Furthermore, many-
administrative difficulties will appear in any effort to entrust a
mandatory grant-making responsibility to the clearinghouse coor-
dinator. Must every organizational applicant seeking funds with
which to represent the poor in federal rulemaking be financed?
If not, which groups in any given situation should be financed?
These difficulties could be largely avoided if, depending on the
facts of each case, the clearinghouse coordinator had the option
of representing the interests of the poor itself or contracting
with others to do so. In addition, freedom for each poor people's
organization to hire its own separate lawyer for these purposes
may be much more expensive and less effective than providing
the poor with one specialist law firm working full time to repre-
sent their collective interests in federal rulemaking.

For all of the above reasons the clearinghouse-coordinator ap-
proach to solving this problem is inadequate. It is too likely to
result in uneven and inconsistent representation for the collec-
tive interests of the poor as a class in federal rulemaking. More-
over, it seems relatively uneconomical and inefficient. As subse-
quent discussion will demonstrate, a more desirable solution to
the problem under consideration can be formulated. That solution
could assure more adequate representation for the poor in federal
rulemaking than the clearinghouse coordinator. At the same time,
it could also incorporate, by one means or another, most of the
special advantages of the clearinghouse coordinator.

IV. The Independent Poor People's Counsel
A. Generally

The most desirable solution to the problem under consideration
would seem to be the creation of a people's counsel organization
which would hire a staff to represent the interests of the poor in
all federal rulemaking that substantially affects them.-* Such a

"This seems to be the general philosophy of the Feighan BiU, H.R. 17974, 90th Cong.. 2d
Sess. (1968), the text of which follows:

Be it enacted by the Senate and House of Representatives of the United States of Ameri-
ca in Congress assembled. That it is fundamental to wise administrative rulemaking that,
except in limited or unusual circumstances, persons whose interests may be affected be as-
sured of an opportunity to participate in rulemaking through submission of data, views, or
arguments to the responsible rulemaking agency. Rulemaking frequently affects persons
without the resources necessary to keep themselves informed concerning proposed rules or to
petition for rules or amendment or repeal of rules. Hence it is necessary that means be
provided whereby, insofar as feasible, the interests of such persons may be protected in
rulemaking and whereby the rulemaking process may be benefited by advocacy on behalf
of such interests.

SEC. 2. Section 553, in chapter 5, Administrative Procedure, of title 5, United States
Code, is hereby amended by adding thereto the following subsection :

"(f) The Attorney General is directed to enter into contracts with, or to make grants

98 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES

counsel would be an artificial representative for the poor in this
process without any pretense of being- a democratically chosen
spokesman of the poor. This counsel, as an advocate, would be
charged with the responsibility of separately and independently
representing the collective interests of the poor as a class in all
federal rulemaking. Where the interests of the poor on a pending
rule are divergent, it would also be responsible for assuring the
representation of those disparate views either in its own presen-
tation or by other individuals or organizations. In performing
its representational responsibility for the economically under-
privileged, such an advocate would be under an affirmative duty
to seek the advice and help of relevant sources of every kind,
whether private or governmental, individual or organizational. It
would be obliged to use every device available to keep in as close
touch as possible with the needs and views of those whose in-
terests it purports to represent. Although such a counsel's staff
would probably be middle class, great pains should be taken,
and special procedures instituted, to prevent it from being cap-
tured or dominated by a middle-class point of view.

As an aid in this respect, it might be desirable to establish
official advisory committees to the poor people's counsel in each
area of major concern such as welfare programs, housing, em-
ployment, education, and so forth. The membership of such com-
mittees should be composed of individuals who are as representa-
tive of the poor of this country as possible. These committees
should not, however, become the exclusive source for the poor's
communication with their people's counsel. There is always a
danger that committee members, regardless of the care exercised
in their appointment, may have divergent views and interests
from the mass of the economically underprivileged. For this
reason, the people's counsel should hold informal hearings among

subject to appropriate conditions to, the National Legal Aid and Defender Association, or
such other nationally organized nonprofit bodies with generally similar objectives as he
may deem desirable, whereby such body or bodies may be provided with funds to enable them
to participate in rulemaking in accordance with this section on behalf of interested persons
who, because of their lack of personal resources, are unable effectively to do so. Any such
body shall be deemed to be an interested person for the purpose of this section. Such body
or bodies may contract with other persons to aid in effectuating the purposes of such con-
tract or grant. The Attorney General is authorized to adopt such rules or regulations as may
be appropriate to the administration of this subsection. He is authorized, further, after
consultation with the agency involved, by order to make this section applicable to matters
relating to public property, loans, grants, benefits, or contracts in circumstances where he
determines that such matters so affect the interests of persons of limited means as to make
it appropriate that, in connection with rulemaking with respect to such matters, a body
or bodies receiving a contract or grant under this subsection should have an opportunity to

represent such interests."

SEC. 3. There are hereby authorized to be appointed such funds as are necessary to

carry out the provisions of section 2.
Senator Hart introduced the same bill in the Senate as S. 3703, 90th Cong., 2d Sess. (1968).

REC. 5. REPRESENTATION OF POOR 99

the poor on the larger and more important issues so that it can
better represent their interests on those subjects. Close liaison
between the people's counsel and Office of Economic Opportunity
(OEO) community action groups, legal aid societies, civil rights
organizations, and other poor people's groups throughout the
country is also crucial. This will help to assure that the people's
counsel will remain as reflective as possible of the real interests,
views, and needs of those people in our society that it ultimately
must serve.

B. Specific Functions of the Poor People's Counsel

The people's counsel would do everything necessary to repre-
sent effectively the interests of the poor in all federal rulemaking
substantially affecting them. Such a body would perform most
of the same functions for the poor with respect to the federal
rulemaking process that Washington law firms perform for their
well-financed clients. It would monitor the activities of federal
agencies to assure that it is fully informed with respect to all
rulemaking or potential rulemaking affecting the interests of the
poor. When a federal agency proposes new rules of concern to
the economically underprivileged, counsel for the poor would
present their views on the desirability of the proposed regula-
tions and actively lobby for the interests of the poor. This would
include the drafting of substitute rules for the ones suggested by
the government agency. Additionally, the people's advocate would
formulate, and urge the appropriate authorities to adopt, en-
tirely new rules and revisions of old rules substantially affecting
poor persons. To perform these functions, the people's counsel
would need an adequate staff not only of lawyers, but also of
economists and other social scientists. This would assure that it
will be capable of competently responding in kind to the argu-
ments and technical data presented by the personnel of the var-
ious agencies with which it must deal.

In addition, the poor people's advocate would be charged with
some of the specific obligations of the clearinghouse coordinator.
That is, it would keep organizations representing the poor in-
formed as to all federal rulemaking affecting their interests, and
it would coordinate and facilitate those organizations' separate
participation in such rulemaking if any of them had the desire
and capacity to do so.

The people's counsel should also be authorized, in its discre-
tion, to make contracts with other organizations as a means of
helping to represent, in the rulemaking process, minority or di-

100 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES

vergent viewpoints with respect to the interests of the poor. Inter-
jection of such minority or divergent views into the rulemaking
process may be a function that the people's counsel will want to
contract out to others because, by doing so, it might avoid some
possible internal conflicts of interest in its organizational setup.
The extent to which this contracting power is actually used ought
to be left to the sole discretion of the people's counsel. Neverthe-
less, the expectation is that the staff of the people's counsel will
normally perform all of the representation functions assigned to
it.

The people's counsel would occasionally propose to the Presi-
dent or Congress, or both, new legislation (or executive orders)
geared to institute reforms in administrative programs substan-
tially affecting the poor. An agency may refuse to exercise its
existing authority to make the kind of rules deemed necessary by
the people's advocate to protect the interests of its constituency.
Or an agency willing to make such rules may not have the author-
ity to do so because legislation forbids it or fails to authorize it.
In all of the above cases Congress can correct the situation by
statute and thereby ensure the promulgation of rules satisfactory
to the people's counsel. As a result, the advocate of the poor
should be empowered to propose legislation to Congress or the
President when that would be an aid in performing its primary
responsibility— effectively representing the poor's collective in-
terests in federal rulemaking.

The people's counsel should also be empowered to play an in-
dependent role in the judicial review of federal administrative
rules. As a representative of the poor, the counsel should be able
to challenge in court, under its own name, the validity of any
federal rule substantially affecting poor persons. Only with this
authority will the views of the people's counsel have any creditable
weight with the agencies before which it is to operate. The image
and attendant effectiveness of the people's advocate will be great-
ly enhanced if federal agencies know that the people's counsel
can freely institute judicial review of agency rules under its
own name and solely on its own initiative. Absent that authority,
the people's counsel might be totally ignored by the administra-
tive establishment; ofl^cialdom would know that there is little
bite behind the counsel's bark. Power to seek judicial review of
an agency's rules on the ground that they are unauthorized, are
in conflict with a statute, are unconstitutional, or have been pro-
mulgated without the required procedure is, therefore, very im-
portant. The poor's advocate should not be forced to give up
after it unsuccessfully opposes the promulgation of a certain rule

REC. 5. REPRESENTATION OF POOR 101

that is antithetical to the interests of the economically under-
privileged if that rule is vulnerable to attack in the courts.

The ability to sue in its own name as an official i-epresentative
of the poor is also especially important to the people's counsel
because that right frees the counsel from any dependency on
particular poor persons who would otherwise have to be the
named plaintiffs in such suits. Since it is responsible for repre-
senting the collective interests of the poor, the people's counsel
should not be put in the position of having to reconcile that duty
with the individual interests of a particular poor person acting as
official plaintiff in a court case. In addition, if the poor people's
advocate can sue in its own name, many administrative difficul-
ties and extra expenses can be avoided. Congress should therefore,
specifically vest the people's counsel with this right. Delegation of
that authority to such a counsel would not, of course, preclude
other individuals and organizations with standing from seeking
judicial review of federal agency rules on behalf of poor people's
interests.

A very broad precedent supporting the right of a representative
body to seek judicial review of administrative action adversely
affecting those w^hose interests it seeks to protect is Office of
Co7nmunicatio7i of the United Church of Christ v. FCC."^ That
case held that a church has standing as a "party in interest"
to seek judicial review as a representative of its members as
listeners whose interests the FCC is required to protect. Since
that organization was a voluntary-membership body seeking to
assert the rights of persons who freely chose to join it, the
Church of Christ case might be distinguished from the situation
under consideration here. However, if an act of Congress ex-
pressly authorized the people's counsel to seek judicial review of
federal rules having a substantial impact on the poor, in its
own name as an official representative of such persons, the stand-
ing of that counsel would be clear. Of course, a question might be
raised whether a case or controversy exists in a judicial proceed-
ing pitting an artificial poor people's representative accorded such
a statutory right to judicial review against an agency whose
rules are challenged on behalf of the poor. However, it seems
clear that one exists. A statute of Congress would impose a
legal duty on the people's counsel to protect the interests of
underprivileged persons in federal rulemaking — a duty that would
include attempts to invalidate improper rules in court; and the
various federal agencies have an adverse legal obligation to de-

"359 F.2d 994 (D.C. Cir. 1966).

102 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES

fend the integrity of their rules against attack by others. Some
might argue that Muskrat v. United States -® casts doubt upon the
ability of such a people's counsel to sue in its own name as a
representative of the poor, even after Congress specifically em-
powers it to do so. But that case is probably no longer the law."

As a wise allocation of its resources, the people's counsel may
frequently elect to assist other agencies representing the poor to
prosecute court cases relating to the validity of federal adminis-
trative regulations instead of instituting such suits itself. To
this end it might distribute to appropriate legal aid organizations
memoranda explaining that specified regulations may be subject
to successful attack in the courts. In addition, the people's advo-
cate could give technical or financial aid to a local legal aid
organization attempting to prosecute, on its own, a test case con-
cerning some federal rule that is inconsistent with the poor's
interests. The people's counsel could also generally coordinate
the efforts of legal aid groups with respect to the judicial review
of federal agency rules.

The people's counsel should also be empowered to intervene
under its own name on behalf of the poor in those agency ad-
judicative proceedings substantially affecting the economically
underprivileged. The poor as a group may have as vital an in-
terest in the outcome of certain agency adjudication as they do
in most rulemaking proceedings affecting them. Many very im-
portant administrative policies are established as a result of ad
hoc agency adjudication. At present, the collective interests of
economically underprivileged people are inadequately represented
in such federal administrative adjudication; effective partici-
pation in those proceedings requires certain skills and expertise
not available to most local legal aid societies who have had little
experience with the intricacies of adjudication before federal
agencies. Therefore, apportioning this function to the poor
people's counsel seems wise.

Representation of the poor in agency adjudicative proceedings
is closely and intimately tied to the counsel's other responsi-
bilities. Assigning this function to the people's advocate will
economically utilize the expertise in federal administrative law
that it will necessarily acquire through the performance of its
other duties. However, the people's counsel will not be empowered
to initiate adjudicative proceedings before federal agencies in

''219 U.S. 346 (1911) (holding that Congress could not authorize named Cherokee Indians to
institute suits on their own behalf and on behalf of other Cherokees having similar allotments
to determine the validity of acts of Congress restricting alienation of certain land and in-
creasing the number of persons entitled to share in it).

''See K. Davis, Administrative Law Text 374 (1959).

REC. 5. REPRESENTATION OF POOR 103

its own name; as an official representative of the poor, it will be
limited to participating in such proceedings as an intervenor.
Where necessary, traditional channels of legal aid can be expected
to initiate such agency adjudicative proceedings in the name of
individual economically underprivileged clients.

Ordinarily the people's counsel should not perform the respon-
sibilities of an ombudsman or personal legal counsel. That is, it
5-hould not normally handle the individual grievances of, or seek
remedies for, particular poor clients. An ombudsman or personal
legal counsel becomes preoccupied with the details of numerous
individual claims and is therefore likely to lack a sufficiently
broad independent perspective about the best ways of serving
the poor as a whole. If it acted to represent particular clients,
the proposed body's individual caseload would be much larger
than its job of affirmatively representing the poor as a class in
federal rulemaking. As a result, the latter function may be oblit-
erated by the former function. In addition, since all citizens,
rich or poor, may experience administrative arbitrariness and
ineptitude, all should have access to an ombudsman. But to be
effective, the office contemplated here must concentrate on and
become expert in the special problems of the poor. It must look
at these problems and proposed solutions solely from the view-
point of the poor. Furthermore, the people's counsel should be
primarily concerned with affirmatively representing the interests
of such individuals prior to, and as a means of avoiding, their
need for an ombudsman ; but because of the nature of an om-
budsman's responsibility, a people's counsel charged with that
additional function may see the needs for affirmative representa-
tion in rulemaking primarily in terms of the poor's appearance
in its office for ombudsman's help. However, there may be very
rare occasions when the people's counsel should be able to repre-
sent a particular person because that is the best or only means
by which to test a certain agency policy affecting the poor as a
class. In those cases it should be free to do so, but only if ab-
solutely essential to its primary function as advocate for the
collective interests of the poor in federal rulemaking.

Finally, it should be recognized that the interests of the poor
and the interests of higher income groups may sometimes be
identical with regard to certain rulemaking or agency adjudi-
cation. To assure adequate representation for the economically
underprivileged, the people's counsel must have the independent
authority to participate on behalf of the poor in all rulemaking
and agency adjudication of concern to those people. However,
a wise allocation of the advocate's resources should lead it to

104 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES

concentrate its efforts on representation of the poor in those
situations where the interests of the poor are not adequately
protected by the endeavors of other more affluent groups.

C. Locating and Structuring the People's Counsel

1. A Government Office of People's Counsel — The proposed
people's counsel might be constituted as a permanent, single-
purpose, and relatively independent federal government office
located outside of any agency before which it would have to rep-
resent the poor. A number of arguments of varying merit have
been made in favor of making the poor's advocate an integral
part of the governmental establishment. It has been contended
that federal agencies might be more receptive to a presentation
of the poor's views by another part of the official establishment
than by outsiders. Therefore, the argument continues, as a part
of the governmental structure the people's counsel might be more
effective than if it were outside of that structure. If it were
part of the official establishment, such a people's counsel might
also be accorded access to useful information and resources that
it otherwise might not be able to obtain. Furthermore, indicat-
ing that representation of the poor's interests has special im-
portance by making it a part of the government itself might
give the economically underprivileged the feeling that the official
establishment really cares about their interests. As a govern-
ment office, the people's counsel might also have a certain pres-
tige and respectability not otherwise obtainable which would
facilitate the recruitment and retention of a competent staff.
In practice, many of these assertions about the advantages of
placing the people's counsel inside of government may prove to
be unrealistic or erroneous. Moreover, location of the people's
counsel as a part of government may actually be disadvanta-
geous for a number of reasons. As a full-time employee of the
United States Government, the poor's advocate is more likely
than otherwise to become, at least over time, a captive of the es-
tablishment — out of touch with the poor, docile, and therefore in-
effective. After all, a certain in terrorem effect would always
exist because the appropriations for the office would continually
be subjected to congressional approval. And the professional
associations of the staff of the people's counsel under these cir-
cumstances would be with other government officials, all work-
ing for the same principal, and all having common interests
and problems in the long run.

The idea that a government agency can do an effective job be-

REC. 5. REPRESENTATION OF POOR 105

cause it would be a member of the team is chimerical. One of
the basic strengths of our legal system is its reliance on the ad-
versary system. The handling of things by a member of the
team smacks of "Big Brotherism." The poor would probably lack
confidence in a people's counsel who, although charged with
representing their interests, was part of the very government
establishment they wanted to influence. The poor might well be-
lieve, regardless of actual performance, that any full-time govern-
ment employee purportedly representing their interests was
really not doing so. Furthermore, the underprivileged segments
of our society seem to reject the basic philosophy underlying
the approach that would appoint a government official to repre-
sent their interests. In the past few years the more militant
elements of the poor have demanded that the poor themselves
be accorded a direct voice in controlling their destiny. Finally,
locating the people's counsel as a part of the federal estab-
lishment may make it less effective than otherwise possible be-
cause its freedom to innovate and experiment may be curtailed
by government red tape and bureaucratic requirements.

There is some precedent supporting the suggestion that a spe-
cial government house counsel be created to represent a group
unable to represent effectively its own interests before federal
agencies because of its large size, amorphous nature, and lack
of organization. There was an independent Office of Consumers'
Counsel charged with asserting consumers' interests in bitumi-
nous coal proceedings before the National Bituminous Coal Com-
mission.-'' The Department of Agriculture also had, at one time,
a Division of Consumers' Counsel which participated in proceed-
ings within that department on behalf of consumers.^^ A similar
position seems to have existed for a period in the National
Recovery Administration, the Department of Labor, and the
Department of the Interior.'" More recently, President Johnson
announced the creation of the Office of Consumer Counsel in the
United States Department of Justice.^^ This new office did not
begin to function until the very end of 1968 because the first
appointee died before he could assume his duties. The status of
the office is now unclear due to the change in national administra-
tions. In any case, the newly created Office of Consumer Counsel
would not be an adequate solution for the problem at hand since

=s 1968-69. U.S. Government Organization Manual 687, 708.

=» Id. at 691.

^ Id. at 687.

" See White House Press Conference of Betty Furness, Special Assistant to the President on
Consumer Affairs, and Attorney General Ramsey Clark discussing the establishment of this
office (mimeo Feb. 6, 1968).

106 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES

the interests of the poor affected by the rulemaking process are
substantially broader than those interests deriving from their
status as consumers.,

History may support the idea that t, people's counsel of the
sort contemplated here should not be constituted as a part of
the government establishment. Almost all of the consumer's coun-
sel offices organized as separate entities within the federal es-
tablishment have atrophied and disappeared. Most of them seem
to have faded because, among other things, they were ineffective
and made no significant contribution to the administrative proc-
ess. Although not completely clear, the reasons for the conspicu-
ous lack of success of these offices seem to have included their
intimate connection with the government establishment (as an
official and integral part of it), and their structural position
within that establishment — that is, the fact that they were lo-
cated inside of the very agencies before which they were to repre-
sent the consumer's interests. '^^

2. A Private Office of the People's Counsel — A second means
of constituting the people's counsel is to utilize a private organi-
zation outside of government for these purposes. By relying on
a body outside the federal establishment, the people's repre-
sentative in rulemaking proceedings may be able to be more
closely tied to and identified with the needs of the poor than
would be possible if it were an official organ of the United States
Government. A nongovernmental body may also be able to com-
municate more effectively with the poor than an official one. As
a private organization separated from the government hierarchy,
it may be less susceptible to being captured by the ideas and
values of the government agencies before which it would repre-
sent the interests of the poor. A private people's counsel may
also be less susceptible than a similar public counsel to intimida-
tion by government agencies; if so, the private organization
would be a more aggressive and persistent representative of the
poor's interests in rulemaking than a public body.

As suggested above, such a private body may also be more
flexible and thus better able to experiment and innovate in the
performance of its assignment than a government-based equiva-
lent. This greater freedom may be especially useful with respect

'^ On the operation of these consumer counsels see generally R. Baker, The National Bi-
tuminous Coal Commission: Administration of the Bituminous Coal Act, 1937-1941 at
221-53 (1941) ; H. Johnson, The Blue Eagle from Egg to Earth 295-96 (1935) ; L. Lyon, P.
HoMAN, G. Terborgh, L. Lorwin, C. Dearing, & L. Marshall, The National Recovery Ad-
ministration 123-28, 210-14 (1935) ; Lewis, The "Consumer" and "Public" Interests Under
Public Regulation, 46 J. Pol. Econ. 97, 103-06, 106 n.lO (1938) ; E. Nourse, J. Davis, & J.
Black, Three Years of the Agricultural Adjustment Administration 391-95 (1937).

REC. 5. REPRESENTATION OF POOR 107

to recruiting a staff and administering its activities. Moreover,
this freedom may mean that a private people's counsel would be
more efficient in the long run than a government body. As noted
earlier, the poor are likely to have greater confidence in a private
counsel's representation of their interests than in a public coun-
sel's performance of that job because their advocate would not
be part of the very establishment which they are trying to in-
fluence. The actions of a private counsel may also be more visible
to the poor than the actions of a public counsel which could
easily get lost in the huge federal bureaucracy and become rela-
tively invisible to outside viewers. This greater visibility might
make a private counsel more responsive to the interests of the
poor and a greater source of satisfaction to them.

On the other hand, it has been urged that such a private or-
ganizational representative of the poor might not be as influential
or effective in rulemaking proceedings as an official agency of the
United States charged with the same obligation. By virtue of
its oflficial status, a public people's counsel charged with repre-
senting the poor may be offered greater cooperation and oppor-
tunity for participation in rulemaking affecting the poor than a
private organization charged with the same duty. In addition,
a private people's counsel may not be, in and of itself, as
effective a mechanism as a public people's counsel to convince
the poor that the federal government really wants their interests
represented in its rulemaking process. A more likely disadvantage
of a private body might be its greater susceptibility to capture
by the interests of some small segment of the poor, with the
result that it would only serve the interests of that special group
among the poor rather than the interests of the poor as a whole.
However, this disadvantage can be offset by structural devices
geared to avoid that situation; and it must be weighed against
the specific advantage that the private organization is less sus-
ceptible to being captured by the "government view" and more
likely to be in close touch with the real needs of the poor.

3. The Public Broadcasting Corporation Model: A Compro-
mise Solution — A third solution to the problem of properly posi-
tioning the people's counsel is a beneficial compromise between
the alternative of locating the advocate for the underprivileged
inside the federal government and locating it entirely outside
and separate from that establishment. The poor's representative
described herein could be constituted as a completely independ-
ent, federally chartered corporation similar in most respects to
the recently created Corporation for Public Broadcasting ^^ or

"47 U.S.C. § 396 (Supp. Ill, 1965-1967).

108 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES

the long" established American National Red Cross."" These orga-
nizations are hybrid public-private bodies. As such, they provide a
model for the people's counsel which may combine the advan-
tages of the purely public body with the advantages of the purely
private body and minimize the disadvantages of each.

The Corporation for Public Broadcasting, for example, was
created by a special act of Congress as an independent, non-
profit, and no-stock entity.^' It is headed by a bipartisan body
of fifteen members whose qualifications and fixed terms of of-
fice are set by statute. They are appointed by the President with
the advice and consent of the Senate and are authorized to make
policy for the body and direct its affairs. The act creating the
corporation specifies its purposes and powers. It also expressly
authorizes the body to obtain grants from, and make contracts
with, individuals and private and governmental organizations
and institutions. According to the statute, the Corporation for
Public Broadcasting must submit detailed annual reports to the
President and Congress outlining the activities, financial condi-
tion, accomplishments of the organization, and any recommen-
dations it deems appropriate. In addition, the statute requires an
annual audit of the corporation's books by an independent cer-
tified public accountant. The financial operations of the body
and its grantees' use of corporation funds may also be audited
by the United States Government for those fiscal years during
which federal funds are involved.

But the public broadcasting body is otherwise independent of
federal authority and is more nearly private than public. The
statute specifically declares that it is not "an agency or establish-
ment of the United States Government." ^^ Neither the directors
of the corporation nor its agents are federal employees by virtue
of their connection with the organization. In addition, full-time
federal government employees are specifically excluded from ap-
pointment to the governing board of the corporation. Finally,
the enabling act expressly notes that nothing contained in any
of its provisions "shall be deemed ... to authorize any de-
partment, agency, officer, or employee of the United States to
exercise any direction, supervision, or control . . . over the Cor-
poration or any of its grantees or contractors. . . ." ^^

The private corporate structure of a people's counsel modeled
after the Corporation for Public Broadcasting assures it the ad-

3^36 U.S.C. § 1 (1964).

'M7 U.S.C. § 396 (Supp. in, 1965-1967).
^47 U.S.C. § 396(b) (Supp. HI, 1965-1967).
"47 U.S.C. § 398 (Supp. m, 1965-1967).

REC. 5. REPRESENTATION OF POOR 109

vantages of a purely nongovernmental body. An organization
of this kind is effectively insulated from federal control of its
day-to-day policy determinations. It can aggressively represent
the interests of the poor before federal agencies and advocate
views distasteful to officialdom without fear of crippling govern-
ment intervention. Such a body is also free, because of its private
organizational structure, of all of the operational rigidities and
inflexibility associated with a government agency. Like a purely
private entity, such a corporation is not bound by the rules of
the federal bureaucracy with respect to such things as the hiring
and compensation of staff, and the means by which its business
is conducted. Consequently, this corporate entity will have as
much freedom to experiment and adapt its practices to changing
exigencies as a purely private organization. The structure of a
corporation of this kind also permits it to draw very easily on
both public and private means of support without unduly com-
plicating the organization's affairs or threatening its independ-
ence in the way that a government agency's independence would
be threatened.

In addition, a people's counsel corporation of the type under
discussion here, like a purely private entity of that sort, can be
more closely tied to, and identified with, the needs of the poor
than a similar government body. This can be achieved by stipulat-
ing certain specific qualifications for appointment to the
organization's private governing board. Similarly, an entity mod-
eled after the Corporation for Public Broadcasting may also be
able to communicate with the poor more easily and flexibly than
if it were a direct part of the federal establishment. Because
this kind of entity is not part of the "official government team,"
it may be less susceptible than a purely public body to being in-
timidated or captured by the ideas, values, and interests of the
agencies with which it deals. The economically underprivileged
may also have more confidence in a people's counsel structured
in this way than in one located within the federal government;
it is apparently independent of federal influence and is controlled
by a private board structured to reflect the interests of the poor.
The actions of such a government-chartered but independent
counsel may also be more visible to the poor than a similar
government counsel lost inside the vast federal establishment.

If the people's counsel were constituted as a body like the
Corporation for Public Broadcasting, it would also have many of
the important advantages of a government-based people's coun-
sel. In quasi-public form, it may have higher status and prestige
than a purely private people's counsel. Thus, it might well be

110 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES

able to secure a more qualified staff and a stronger board of di-
rectors than could a private body. Such an organization can
easily be funded by the national government and can deal to
some extent as an official equal with federal agencies. As a
quasi-official body, federal agencies might be more receptive to
its presentation of the poor's views than if those views were pre-
sented by a purely private body; and, a quasi-official people's
counsel might be accorded access to information and resources
not as easily obtainable by a purely private entity. This seems
to have been true of the Red Cross, for example. Constituting
the people's counsel as such a quasi-official body might also give
the poor a feeling that the federal government itself really cares
about them and is attempting to ensure fair representation for
their views with respect to rulemaking that vitally affects their
interests. At the same time, the independent structure of the
people's counsel organization assures the poor that a meaningless
"Uncle Tom" has not been created.

The above discussion suggests that the best way of structuring
the people's counsel is to establish it as a quasi-public body
modeled on the Corporation for Public Broadcasting. At the start,
such a body would, of course, require action by Congress. After
it was set up, it would not be dependent on the government to
any appreciable extent except perhaps for part of its financing —
an aspect which will be discussed below. Careful drafting of the
enabling statute should assure the creation of an effective and
meaningful advocate for the poor in all federal rulemaking sub-
stantially affecting them.

D. Financing the People's Counsel

Financing the people's counsel raises additional problems. It
is clear that a rather large infusion of new money will be needed
to support such an entity on a long-term, continuing, and effec-
tive basis. Resources currently available to the poor and their
organizational representatives are totally inadequate to support
this new responsibility in any satisfactory way. The source of the
extra money required could be federal, private, or both. Utiliza-
tion of federal money for this purpose has some distinct advan-
tages. The function which must be performed is too important
and urgent a part of the federal administrative process to en-
trust its support to the uncertainties of private fund raising.
Only an infusion of federal money can guarantee, relatively soon,
the kind of funding that is necessary for this project to assure
proper, immediate representation of the type contemplated here.

REC. 5. REPRESENTATION OF POOR 111

The circumstances of the era in which we live suggest that it is
too late to talk solely in terms of a short-term demonstration
project. What is needed — and needed now — is adequate repre-
sentation for the poor in federal rulemaking on a permanent,
reliable, and quantitatively sufficient basis.

However, it may be possible to secure the funds needed to pro-
mote a quasi-public people's counsel from nongovernmental
sources. Large charitable foundations might provide a long-term
guarantee of adequate revenue, especially if they understood the
vital and special importance of this particular project. In addi-
tion, individual and business contributors might be induced to
support such a body in the same way that they support charities
such as legal aid societies. However, to attract substantial gifts
of private funds from individual or business donor, the people's
counsel corporation must be a tax exempt charity. In order to
clear up any doubts on that subject. Congress should specifically
stipulate in the statute creating the people's counsel that it is
tax exempt for these and other purposes.

A number of arguments suggest the long-term desirability of
financing such a people's advocate exclusively from nongovern-
ment funds if that should prove practical, feasible, and realiz-
able sufficiently quickly. As a contractor with the federal gov-
ernment — bound to provide in return for monies furnished the
representation required — the people's counsel becomes, to some
extent at least, a tainted instrument of the government in the
eyes of the poor. Even if it is not true, the poor may feel that
their counsel will not bite the hand that feeds it. Furthermore,
because of the grant-making agency's authority to discontinue
grants to the people's counsel, that agency will be in a position to
exert pressure on the advocate for the poor which might be dele-
terious to the most vigorous performance of its duties. If fhe
people's counsel even fears that aggressive and persistent repre-
sentation in rulemaking of certain unpopular views favoring
the poor might induce a withdrawal of federal funds, it may
become timid, lethargic, and unnecessarily cautious. In addition,
a grant of federal funds is rarely made without relatively
detailed conditions, and such strings might remove some of the
desirable flexibility and capacity to innovate and experiment nor-
mally possessed by a privately financed operation of the same sort.

However, the above objections to the use of federal funds are
not sufficiently important to be controlling if government money
is in fact necessary to finance such a people's counsel quickly,
adequately, and on a long-term basis. If government financing is
required, the OEO might logically be considered as a funding

112 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES

agency. The sole purpose of the OEO is to help the impoverished
of this country. In addition, it is in an especially good position
and has the specialized resources to evaluate the faithfulness
and effectiveness with which the people's counsel represents the
interests of the poor. Through its Community Action Programs,
Vista Volunteers, Legal Service Offices, and Job Corps Centers!
the OEO is in daily, intimate contact with the poor. It also has
the advantage of a broad and continuing experience with the
poor and their special needs and problems, and a particular in-
terest in providing funds to secure adequate legal representation
for the economically underprivileged. Empowering the OEO
Legal Services Program to make grants to a people's counsel
for the purposes outlined in this Article might just round out this
federal agency's current attack on inadequate legal representa-
tion for the poor generally.

On the other hand, there is a very persuasive reason to appoint
another federal agency as the grant-making body. The OEO is
one of the most significant federal agencies making rules with a
substantial impact on the poor. That body will, therefore, be
one of the agencies before which the people's counsel will con-
tinuously have to represent the collective interests of the poor.
If the OEO were designated as the agency to finance the people's
counsel it would necessarily be put in a position whereby it
could influence — perhaps detrimentally — its grantee's represen-
tation of the poor with respect to the OEO's rulemaking. Regard-
less of the purity of the OEO's actions in this regard, such a
structural situation might cause the people's counsel to be un-
necessarily timid in representing the poor's interests before the
OEO. Designation of the OEO as grant maker for this purpose
would also make less credible to the poor the efforts of the
people's counsel to represent their interests before the OEO. Even
if it were untrue, the poor might think that their counsel would
be likely to play ball with its benefactor. For these reasons,
any government grantor of funds to support the people's counsel
should not be an operating agency whose programs have a large
impact on the poor.

V. Section 4 of the Administrative Procedure Act
A. Generally

Even if the above recommendations are adopted, there is in-
adequate assurance that the interests of the poor will be repre-
sented in federal rulemaking unless some means is devised by

REC. 5. REPRESENTATION OF POOR 113

which to guarantee such persons notice of proposed regulations
substantially affecting them and an opportunity to submit their
views to the proper authorities. The required notice and oppor-
tunity-to-participate provisions of section 4, subsections (b)-(e)
of the APA might be adequate for this purpose were it not for
the blanket exemptions from those provisions found in section
4(a).''«

A majority of the federal administrative programs substantial-
ly affecting the poor are excepted from the notice and opportunity
to participate requirements of subsections (b)-(e) by the ex-
emption for matters relating "to public property, loans, grants,
benefits or contracts" found in subsection (a)(2). This means
that in rulemaking for most programs of special concern to the
poor, federal agencies need not give any notice of proposed regula-
tions in the Federal Register. Similarly, in the excepted situa-
tions, federal agencies need not allow "interested persons,"
including the poor or their representatives, to participate in rule-
making "though the submission of written data, views, or argu-
ments" or through "the right to petition for the issuance,

» Administrative Procedure Act § 4, 5 U.S.C. § 553 (1964):

(a) This section applies, according to the provisions thereof, except to the extent that there
is involved —

(1) a military or foreign affairs function of the United States; or

(2) a matter relating to agency management or personnel or to public property, loans,
grants, benefits, or contracts.

(b) General nature of prepared rulemaking shall be published in the Federal Register,
unless persons subject thereto are named and either personally served or otherwise
have actual notice thereof in accordance with the law. The notice shall include —

(1) a statement of the time, place, and nature of public rulemaking proceedings;

(2) reference to the legal authority under which the rule is proposed; and

(3) either the terms or substance of the proposed rule or a description of the subjects
and issues involved.

Except when notice or hearing is required by statute, this subsection does not apply — ■

(A) to interpretative rules, general statements of policy, or rules of agency orga-
nization, procedure, or practice; or

(B) when the agency for good cause finds (and incorporates the finding and a
brief statement of reasons therefor in the rules issued) that notice and public
procedure thereon are impracticable, unnecessary, or contrary to the public
interest.

(c) After notice required by this section, the agency shall give interested persons an oppor-
tunity to participate in the rulemaking through submission of written data, views, or
arguments with or without opportunity for oral presentation. After consideration of
the relevant matter presented, the agency shall incorporate in the rules adopted a con-
cise general statement of their basis and purpose. When rules are required by statute to
be made on the record after opportunity for an agency hearing, sections 556 and 557 of
this title apply instead of this subsection.

(d) The required publication or service of a substantive rule shall be made not less than
30 days before its effective date except —

(1) a substantive rule which grants or recognizes an exemption or relieves a restriction;

(2) interpretative rules and statements of policy; or

(3) as otherwise provided by the agency for good cause found and published with the
rule.

(e) Each agency shall give an interested person the right to petition for the issuance,
amendment, or repeal of a rule.

114 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES

amendment, or repeal of a rule." Of course, the relevant agencies
have the discretionary authority to give notice and allow partici-
pation in the excepted situations, but they are under no obliga-
tion to do so.

B. Should the APA Be Modified To Cure This Problem?

Question 3 of the special questionnaire sent to the relevant
federal agencies as part of this study asked:

In developing and promulgating rules for the implementation of each
of these programs [with a substantial impact on the poor], does your
department or agency follow the provisions of 5 U.S.C. 533(b)-533(e)
[APA section 4, subsections (b)-(e)], even when the rulemaking pro-
ceeding is excepted from these provisions by one of the exclusions in 5
U.S.C. 533(a) [APA section 4(a)]? If you do not do so, please describe
the procedures you do employ in rulemaking in each of these programs.

The overwhelming majority of answers to this question indicated
that the reporting agencies do not follow the notice and opportu-
nity-to-participate procedures of subsections (b)-(e) when their
rulemaking is excepted from them under section 4(a).^^ Only a
very few agencies indicated a contrary practice, and even these
confessed to inconsistency in this regard.*" In addition, rulemak-
ing procedures actually utilized by the agencies in the excepted
situations are inadequate substitutes for those found in subsec-
tions (b)-(e) of APA section 4. Substitute procedures are not
consistent and do not, in most cases, assure adequate notice to the
poor or a sufficient opportunity for their participation. In some
cases not governed by subsections (b)-(e), the agencies simply
determine the rule they think appropriate and promulgate it
without notifying or consulting with anyone outside the agency."

'* The Department of Agriculture, for example, reported that "the Department does not
follow the provisions of 5 U.S.C. 553(b)-553(e) in developing and promulgating rules for the
programs listed above" ; the Department of Housing and Urban Development reported that
"the provisions of 5 U.S.C. 553(b)-(e) are not followed for programs covered by the exemp-
tion;" and the Veteran's Administration reported that "in developing and promulgating rules
for the implementation of veteran's programs we do not generally follow the provisions of 5
U.S.C. 553(b) -553(e), as our rulemaking procedures are excepted by the provisions of 5 U.S.C.
553(a) (2)."

*" For example, the Department of Labor reported that "in cases of rulemaking excepted
from 5 U.S.C. 553 the Department of Labor does nevertheless follow the provisions of section
533 when it deems it appropriate or desirable to do so." The Department of Transportation
also reported that while it does follow § 553(b)-(e) [APA § 4, subsections (b)-(e)] for some
programs exempted from § 553 (APA § 4), at the present time it does not do so for most such
exempted programs.

■** For example, the Small Business Administration reported that "under the exemption in
5 U.S.C. § 553(a), rules for [the Local Development Company Loan Program and the Economic
Opportunity Loan Program] are initially published and issued in the form adopted by the
agency." The Department of Labor reported as to rulemaking exempted from § 553 (APA § 4)
that it "frequently gives public notice of proposed rulemaking and invites public participation
therein when the proposed rule is expected to have widespread effects and when for any other

REC. 5. REPRESENTATION OF POOR 115

In other cases, agencies give notice to, and engage in informal
consultation with, whomever they happen to think appropriate
under the circumstances.'^

Question 4 of the questionnaire asked the same federal agencies
responding to the prior question the following :

What disadvantages, if any, do you see in a statute which would elimi-
nate the exclusions now in 5 U.S.C. 553(a) [APA section 4 (a)] as
they may apply to . . . [your programs with a substantial ;"^Pact on
the poor], and thereby would make the provisions of 5 U.S.C. 55J(D -
553(e) [APA section 4, subsections (b)-(e)l applicable to all rulemak-
ing relating to these programs? (Assume that the several exceptions
now in sections 553(b) through (e) would remain unchanged.)

Although a number of agencies saw no substantial disadvantages
in eliminating the blanket exclusions of subsection (a) under
the specific conditions indicated in the above question," most
respondents thought it undesirable to eliminate any of these
exclusions. The reasons advanced for maintaining the section
4(a) exceptions to the requirements of subsections (b)-(e)
varied: elimination of the exceptions is unnecessary;*^ it would
make rulemaking too cumbersome and thereby deprive the agency
of desirable and necessary flexibility in the adoption of its rules ; '■'
it would cause needless and injurious delay in the final pro-

reason it is considerd desirable to obtain the views and objections of those to whom the rules
would apply, otherwise, the rules are evaluated by the bureau concerned, and are adopted and
published in the Federal Register." .. ,_ . , .- „„j ;„„io

« For example, the Tennessee Valley Authority reported that "the formulation and imple-
mentation of TVA policies in carrying out its program of resource development use are ex-
cluded from the rulemaking procedure of 5 U.S.C. § 553 by the provisions of «"^«-;-" <* •
Such policies and the implementation thereof are determined by the TVA Board and -rerecord-
ed for internal guidance in an administrative code. They "e b---«»;,t to the -"-tion of
interested units of government, organizations, and institutions, through discussion ""^ "^f"^^;
Won and appropriate press releases." The Department of Agriculture "[f P°"<*^^ ^^•'\'^,^^*
to its food program that it does not follow § 553(b)-(e). ,»>"V;^^^V t'LrsoTnel oJ the

proposed regulations and amendments thereto are discussed with dis rict l^J'°^^'\f '^^
Department and with representatives of the State agencies, in ^'-^''-\ ^I'^'^'^ZT Zlrs^s
conferences or operating as task force groups." (Note that recipients of these food programs
or their representatives were not among those listed as being consulted.) ,i„Hv«ntaees

«The Department of Labor reported it "does not anticipate substantial d.sadvanUges
to the programs listed in response to question 1 from the elimination of the -^'--^ "°^ '^^
5 U.S.C. 553(a)" and the Department of Transportation reported that we wou d "Ot object
to elimination of the exemptions for loans and grants. The Department is in ^^''•^''^'"^^^
advantage of the exclusion in the case of Federal airport aid. and is considering following this
course in the case of its other grant and loan programs.

«For example, the Department of Health. Education, and Welfare replied that we h^e
found that in the «rant-in-aid field, publication of notice of P^^f «' ■'"•^f '"^, '"/^; J^„
eral Register is not the most suitable way to focus the attention of interested persons, agencies
and groups on the proposal." , , ,

"For example, the Tennessee Valley Authority responded that "application of the rule-
making procedures of 5 U.S.C. § 553 to the TVA resource development program would de-
cTease its flexibility and hinder its effectiveness." Similarly the Department of A."cu.ture
reported that "it would be unnecessarily cumbersome to apply the procedures of the sUtute
and might deprive the Department of a desirable flexibility in the adoption of rules.

116 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES

mulgation of rules for some programs ; ^^ it would cause a tremen-
dous increase in agency work and operating costs ; ^^ it would be
insufficient as a means to assure in all cases adequate participa-
tion by the relevant people in rulemaking and, therefore, might
sometimes needlessly require an agency to follow two sets of
procedures in order to involve properly the right persons;*^ it
might put the agency and those most directly affected by its
policies in an adversary position, thereby discouraging mutual
cooperation toward obtaining the best solutions to common prob-
lems ; *^ and, it might conflict with some specific provision of the
agency's enabling act.^''

In light of the injurious effect which these exemptions have on
the ability of the poor to represent their interests in rulemaking,
the above reasons for continuing them for programs substantially
affecting the poor do not seem persuasive. It should be noted
that elimination of the across-the-board exemptions in section
4(a) would still leave section 4(b) (B) in force. This provision
states that "when the agency for good cause finds (and incorpo-
rates the finding and a brief statement of reasons therefor, in
the rules issued) that notice and public procedures thereon are
impracticable, unnecessary, or contrary to the public interest,"
it does not have to utilize such procedures in its rulemaking.
Furthermore, if the policies expressed in subsections (b)-(e)
are presently sound respecting unexcepted situations, they should
be equally sound with respect to "public property, loans, grants,
benefits and contracts." The reason for this is that the previously

** The Department of the Interior stated, for example, that "we would not favor the elimina-
tion of the exclusions in 5 U.S.C. 553(a) since to do so could produce injurious delays in the
adoption of regulations." Similarly, the Small Business Administration replied that "it could
complicate or delay rulemakinR," and the Department of Agriculture reported that the "F.H.A.'s
operations would be seriously delayed and reduced in effectiveness if its rules were subjected
to the mandatory notice and public procedure requirements."

^' For example, the Veteran's Administration responded that elimination of the section 553(a)
exclusions "would lead to heavier workloads within the agency and a resulting increase delay
in awaiting benefits thereunder." In addition, although the Department of Labor saw no
substantial drawbacks to repeal of the exemption in section 553(a) it did note that it "would
of course, substantially increase the cost of Government."

•" For example, the Office of Economic Opportunity responded that "the major disadvantage
in a statute which would eliminate the exclusions now in 5 U.S.C. 553(a) is that it would
require OEO to follow two sets of procedures, those of 5 U.S.C. 553, which would generally
prove ineffective in reaching the poor, and those currently followed, particularly by CAP, which
have proved effective and are constantly being made more effective."

"•^ The Tennessee Valley Authority responded that "procedures for the formulation of policies
under the rulemaking requirements of 5 U.S.C. § 553 would place TVA and its distributors
in an advisory position where the tendency would be for each distributor or group of distribu-
tors to try to gain advantage in the formulation of the policy rather than working with TVA
and other distributors in a mutual effort to find the best possible solution to each problem
as it arises."

™ For example, the Department of Health, Education, and Welfare reported that with respect
to some programs, "the authorizing statute provides for rulemaking procedures other than
those provided by the APA . . . ."

REC. 5. REPRESENTATION OF POOR 117

noted objections to the application of subsections (b)-(e) to the
classes now excepted by subsection (a) can also be leveled against
the applicability of the former provisions to rulemaking not
presently excepted by subsection (a). Consequently, there are no
persuasive arguments which preclude repeal of all exemptions
contained in section 4(a) as they may apply to programs with
a substantial impact on, the poor.

The exemptions contained in section 4(a) of the APA might,
therefore, be amended to require federal agencies to follow the
provisions of subsections (b)-(e) in all situations where their
rulemaking has a substantial impact on the poor. A statutory
change of this kind is somewhat broader than, but generally
similar to, that contained in a recent bill introduced by Con-
gressman Feighan of Ohio.''^ Congressman Feighan's bill would
authorize the Attorney General of the United States to lift the
exemption contained in section 4(a) whenever he deems that
desirable to protect the interests of the poor. Once the Attorney
General lifted the exemption as to a particular rulemaking situa-
tion because the "interests of persons of limited means . . . make
it appropriate," any "interested person," rich or poor, could
presumably assert rights to participate under subsections (b)-
(e). As noted earlier, agencies have unlimited discretion to
permit public participation in situations excepted by section
4(a), but they are not required to do so; the Feighan bill would
only extend this same discretion to the Attorney General where
he decides the interests of the poor require it.

Some might argue that the Feighan bill, or a broader revision
of section 4(a) expressly requiring federal agencies to follow the
provisions of subsections (b)-(e) for all rulemaking having a
substantial impact on the poor, raises serious fifth amendment
due process questions of an equal protection nature. The argu-
ment is that statutory revisions of this sort give the poor an
unfair and irrational advantage over all other Americans. The
proposed modifications would require federal agencies to provide
notice and an opportunity to participate in normally exempted
situations where the poor would be benefited by such rights ; but
these modifications would not oblige agencies to provide these
opportunities where they would only benefit the more affluent.
However, this classification is rational because, unlike the poor,
the American upper and middle classes have adequate alterna-
tive means for protecting their interests in rulemaking.

To protect their collective interests, the more affluent members

"H.R. 17974, 90th Cong., 2d Sess. (1968) ; see note 24 supra.

118 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES

of our society do not need formal notice of proposed rules and
an official opportunity to present their views to the appropriate
authorities. After all, most official policy makers are middle-class
persons who have had middle-class experiences and daily as-
sociations. Consequently, those who are responsible for making
administrative regulations are oriented toward the middle-class
point of view and are generally conversant with the collective
interests of that group. They are, therefore, likely to understand
and protect the collective interests of the more affluent, even
where such persons do not have a chance to represent their
interests formally in rulemaking proceedings vitally affecting
them. In order to equalize the poor's position in rulemaking with
that of better financed segments of society, the poor may need
special guarantees to assure full consideration of their views.

Modification of the section 4(a) exemptions along the lines
suggested above would assure that the poor and their representa-
tives, including the people's counsel, would have a reliable means
by which to discover and participate in proposed rulemaking of
concern to them; they could simply watch the Federal Register.
Such a change could probably be effected either by statute or by
an executive order, since the President has the authority to
command his subordinates to do that which they now have the
discretion to do. Since a purely procedural requirement of this
type would not seem to interfere with the substantive policy-
making functions of the independent federal agencies, they may
also be bound by such an order.

However, there is a substantial evidence that section 4(a)
needs a general legislative overhaul. Alteration or repeal of that
provision has been proposed apart from any more specific con-
sideration of its effect on the ability of poor people to represent
their interests adequately in the rulemaking process.^^ Testimony
adduced in the course of congressional hearings suggests the
possible desirability of across-the-board revisions of the section
4(a) exemptions. ^^ Consequently, it may be wise to leave the
provision as it is pending further inquiry into the advisability
of amending it generally. Instead of narrowly altering the pro-
vision at this time in order to solve the particular problem under
consideration, federal agencies should simply be urged, in strong

^2 See, e.g., S. 163, 88th Cong., 2d Sess. § 4 (1964) (Comm. Revision) ; S. 518, 90th Cong.,
1st Sess. § 4 (1967).

" Hearings on S. 1663 Before the Subcom. on Administrative Practice and Procedure of the
Senate Comm. on the Judiciary, 88th Cong., 2d Sess. (1964) ; Hearings on S. 518 Before the
Subcom. on Administrative Practice and Procedure of the Senate Comm. on the Judiciary,
90th Cong., 1st Sess. (1967).

REC. 5. REPRESENTATION OF POOR 119

terms, to follow the provisions of subsections (b)-(e) for all
rulemaking substantially affecting the poor.

C. Special Notice and Hearing for the People's Counsel

For the present purposes, another proposal can be made which
would partly obviate the need to amend the current exemptions
contained in section 4(a). All federal agencies contemplating the
promulgation of rules substantially affecting the poor should be
required to notify the people's counsel of the pendency of such
rules and to give this advocate for the underprivileged an op-
portunity to present the views of the poor. Imposition of this
type of duty on a federal agency is not unprecedented. For
example. Budget Bureau Circular A-85, discussed previously,"''
directs federal agencies to follow specific procedures with respect
to the development of rules and policies for federal assistance
programs that include among their eligible recipients state or
local governments or quasi-public agencies. Unless special cir-
cumstances preclude it, issuing agencies are required to provide
the Advisory Comn\ission on Intergovernmental Relations (ACIR)
with a copy of all proposed regulations — usually not less than
forty-five days prior to their intended promulgation. The ACIR
is then under a duty to transmit that information to various
state and local government associations which have, normally,
three weeks in which to comment to the agencies on the proposed
regulations or policies. Another similar obligation to provide
special notice and opportunity to appear is imposed by statute
on the Interstate Commerce Commission :

Before hearing or disposing of any complaint (filed by any person other
than the Secretary) with respect to rates, charges, tariffs, and practices
relating to the transportation of farm products, the [Interstate Com-
merce] Commission shall cause the Secretary [of Agriculture] to be
notified, and, upon application by the Secretary, shall permit the Secre-
tary to appear and be heard."

A similar requirement should now be adopted for all federal
agencies with reference to their proposed promulgation of rules
substantially affecting the economically underprivileged. If such
a procedure were made mandatory, the present exceptions con-
tained in section 4(a) would not seriously prejudice the ability
of the poor to have their views represented in the formulation
of rules substantially affecting them. When it received notice of
such contemplated rulemaking, the people's counsel would dis-

''* See page 91 supra.

«7 U.S.C. § 1291(a) (1964).

120 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES

seminate that information to all interested poor people's orga-
nizations. After obtaining feedback from them, the people's ;
advocate would affirmatively represent the views of the econom-
ically underprivileged to the relevant agency. The effective and
economical operation of the people's counsel therefore makes it
desirable to impose the following requirements on federal agen-
cies: they must notify the poor's "official" group counsel of all
proposed rulemaking substantially affecting poor persons and
give it an opportunity to communicate to appropriate officials
the views of the economically underprivileged with respect to
those proposed rules.

It is true, of course, that this limited requirement would not
be as satisfactory a cure for the problem as an outright modifica-
tion of section 4(a) in all cases where poor people's interests are
concerned. A substitute provision of the kind suggested above
would not assure notice of proposed rulemaking to anyone but
the people's counsel and those informed by the people's counsel;
and in such circumstances no one but the people's counsel would
have a right to present formally the views of the poor with
respect to those rules. However, pending general revision of
section 4(a), this seems a desirable requirement and a minimally
satisfactory substitute guarantee for present purposes.

To ensure that the administrative process is not unreasonably
burdened in some situations, an exception similar to that found
in APA section 4(b) (B) should be engrafted onto the narrow
requirement discussed above. Federal agencies should be allowed
to promulgate rules substantially affecting the poor without giv-
ing prior notice and an opportunity to be heard to the people's
counsel "where the agency for good cause finds (and incorporates
the finding and a brief statement of the reasons therefor in the
rules issued) that notice and . . . [an opportunity for the people's
counsel to present its views prior to promulgation of the rules]
are impracticable, unnecessary or contrary to the public interest."
In cases of this sort, agencies should be required to notify the
people's counsel, as soon as practicable, of any consummated rule-
making substantially affecting the poor. Moreover, they should
also be required to provide it an opportunity to present the views
of the poor with respect to the desirability of amending or re-
scinding any such rules. This requirement will at least facilitate
a reconsideration of accomplished rulemaking in light of the
views of the poor where presentation of their position is im-
practical prior to rulemaking.

The specific requirements suggested here with respect to giving
the people's counsel notice and an opportunity to be heard could

REC. 5. REPRESENTATION OF POOR 121

be imposed by statute or executive order. The latter method
might be as efficacious as the former in binding independent
regulatory agencies, since the order would deal only with a mat-
ter of procedure and would not attempt to invade their sub-
stantive policymaking functions. The ease with which such an
order could impose or remove these requirements, or modify them
as the need dictates, may also make it a more desirable tool for
this purpose than a statute.

VI. Conclusion

Any attempt to cure the poor's lack of representation in federal
rulemaking substantially affecting their interests requires a num-
ber of remedies rather than a single one. Congress should insti-
tute procedures to facilitate and encourage greater self-initiated
efforts by relevant administrative agencies to ascertain the views
of the poor. Some body must also perform the functions of a
clearinghouse coordinator in order to facilitate greater
affirmative participation by the poor and their organizational
representatives in rulemaking. To ensure consistent, affirmative
representation of high quality for the collective interests of the
poor. Congress should create a people's counsel with the responsi-
bilities described above. To perform its function properly, the
people's counsel must receive notice of contemplated rulemaking
affecting the poor, and must have an opportunity to present poor
people's views on the proposed rules to the relevant agencies.

All of these measures in combination should — if properly ex-
ecuted in light of their purposes — provide an adequate remedy
for the problem at hand. These recommendations are desirable
because they will improve the administration of government.
They will assure that the administrative decision makers in the
federal establishment are better informed about the interests of
the poor than at present. These proposals should also eliminate
one source of unnecessary tension between the poor and the
federal establishment. They will provide procedures whereby the
poor can get a fair hearing on the formulation of significant
public policies affecting them. The specific proposals made here
will not create any substantial negative impact on the rulemak-
ing process. They will make important affirmative contributions
to that process. Since the lack of representation for the poor in
federal rulemaking is a critical problem, these proposals should
be implemented as swiftly as possible.

RECOMMENDATION NO. 6

DELEGATION OF FINAL DECISIONAL AUTHORITY
SUBJECT TO DISCRETIONARY REVIEW BY THE AGENCY

RECOMMENDATION

1. In order to make more efficient use of the time and energies
of agency members and their staffs, to improve the quality of
decision without sacrificing procedural fairness, and to help
eliminate delay in the administrative process, every agency hav-
ing a substantial caseload of formal adjudications should con-
sider the establishment of one or more intermediate appellate
boards or the adoption of procedures for according administra-
tive finality to presiding officers' decisions, v^^ith discretionary
authority in the agency to affirm summarily or to review, in
whole or in part, the decisions of such boards or officers.

(a) Intermediate appellate boards

(1) Whenever an agency deems it appropriate for the efficient
and orderly conduct of its business, it may, by rule or order:

(a) Establish one or more intermediate appellate boards
consisting of agency employees qualified by training, ex-
perience, and competence to perform review functions,

(b) Authorize these boards to perform functions in con-
nection with the disposition of cases of the same character
as those which may be performed by the agency,

(d) Restrict the scope of inquiry by such boards and by
the agency in any review, without impairing the authority
of the agency in any case to. decide on its own motion any
question of procedure, fact, law, policy, or discretion as fully
as if it were making the initial decision.

(2) Any order or decision of an intermediate appellate board,
unless reviewed by the agency, shall have the same force and
effect and shall be made, evidenced, and enforced in the same
manner as orders and decisions of the agency.

(3) A party aggrieved by an order of such board may file an
application for review by the agency within such time and in

122

REC. 6. DELEGATION OF DECISION MAKING 123

such manner as the agency shall prescribe, and every such ap-
plication shall be passed upon by the agency.

(5) An agency, on its own initiative, may review in whole or
in part, at such time and in such manner as it shall determine,
any order, decision, report, or other action made or taken by an
intermediate appellate board.

(7) The filing of an application for agency review shall be a
condition precedent to judicial review of any order of an inter-
mediate appellate board.

(8) Agency employees performing review functions shall not
be responsible to or subject to the supervision or direction of any
employee or agent engaged in the performance of investigative
or prosecuting functions for any agency.

( b ) Discretionary review of decisions of presiding officers

(1) When a party to a proceeding seeks administrative review
of an initial decision rendered by the presiding officer (or other
officer authorized by law to make such decision), the agency
may accord administrative finality to the initial decision by
denying the petition for its review, or by summarily affirming
the initial decision, unless the party seeking review makes a
reasonable showing that :

(a) A prejudicial procedural error was committed in the
conduct of the proceeding, or

(b) The initial decision embodies (i) a finding or con-
clusion of material fact which is erroneous or clearly errone-
ous, as the agency may by rule provide; (ii) a legal con-
clusion which is erroneous; or (iii) an exercise of discretion
or decision of law or policy which is important and which
the agency should review.

(2) The agency's decision to accord or not to accord adminis-
trative finality to an initial decision shall not be subject to judicial
review. If the initial decision becomes the decision of the agency,
however, because it is summarily affirmed by the agency or

124 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES

because the petition for its review is denied, such decision of
the agency will be subject to judicial review in accordance withi;
established law.

REPORT OF THE COMMITTEE ON AGENCY ORGANIZA-
TION AND PROCEDURE IN SUPPORT OF INTERMEDI-
ATE APPELLATE BOARDS: SUBPARAGRAPH 1(a) OF
RECOMMENDATION NO. 6

Prepared by

James O. Freedman

Professor of Law

University of Pennsylvania

Recent criticism of the federal administrative agencies has
called attention to two fundamental problems that threaten and
often compromise the effectiveness of the administrative process :
delay in the disposition of contested proceedings and failure to
achieve coherent policy formulation. There are differences of
opinion as to the causes of these problems and differences in
estimate about what measures would be most likely to solve them.
But there is widespread agreement that the problems exist.

The late James M. Landis, in his Report on Regtilatory
Agencies to the President-Elect, submitted to John F. Kennedy
in December, 1960, put the first problem directly: "Inordinate
delay characterizes the disposition of adjudicatory proceedings
before substantially all of our regulatory agencies." ^ The sta-
tistics he reported from the larger regulatory agencies demon-
strated that long periods of time were required by most to bring
formal proceedings to a conclusion.- Several agencies required
as long as three years to dispose of a proceeding. Other agencies
had such large backlogs of pending cases that their present staffs
could not hope to clear them up in less than a decade, even
assuming that no new cases were docketed in the interim. The
available statistics, Dean Landis concluded, "all corroborate the
fact of interminable delay." => There is some evidence that delay

* J. M. Landis, Report on Regulatory Agenctejs to the President-Elect 5 (submitted by
the Chairman of the Subcommittee on Administrative Practice and Procedure to the Senate
Committee on the Judiciary), 86th Cong., 2d Sess. (Comm. Print 1960) [hereinafter cited
as Landis Report].

^ Landis Report 5-6.

' Landis Report 6. On the problem of delay, see also Goldman, Administrative Delay amd
Judicial Relief, 66 Mich. L. Rev. 1423 (1968) Freedman, The Uses and Limits of Remand in
Administrative Law: Staleness of the Record, 115 U. Pa. L. Rev. 145 (1966) ; Gellhorn, Ad-

125

126 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES

in the administrative process, at least in some agencies, has
become v^^orse since Dean Landis wrote.*

Related to the problem of delay is the fact that the cost of
pursuing administrative remedies has become steeper. Delay often
means increased costs in litigating a protracted proceeding at
the administrative level and increased indirect costs while await-
ing the ultimate administrative determination. The rise in costs
has been particularly acute in cases involving petitions for im-
portant certificates or licenses from regulatory agencies. "The
result," as Dean Landis said, "is that in many situations the
small businessman is practically excluded from an opportunity
to compete." '^

The second problem— the failure of the federal administrative
agencies to achieve the formulation of coherent policy — has been
given its fullest statement by Judge Friendly.^ The problem, in
his words, "is the failure to develop standards sufficiently defi-
nite to permit decisions to be fairly predictable and the reasons
for them to be understood." ' Although most statutes command
the agencies they create to develop broad policies in the areas
subject to their jurisdiction, such policy formulation as has re-
sulted has widely been regarded as inadequate.^ Newton Minow,
writing to the President upon completion of his service as Chair-
man of the Federal Communications Commission, noted that
although "[p]olicy making is the critical responsibility of the
agency ... it is precisely in this area that the agencies have
been markedly deficient." « Dean Landis came to similarly criti-

miniatrative Procedure Reform: Hardy Perennial. 48 A.B.A.J. 243 (1962) ; Note Judicial
Acceleration of the Administrative Process: The Right to Relief From Unduly Protracted Pro-
ceedings, 72 Yale L.J. 574 (1963).

* See Staff of the Senate Comm. on the Judioary. 89th Cong., 2d Sess., Evaluation
t^HARTS ON Delay in Administrative Proceedings (Comm. Print 1966) ; Statement of Frank
W. McCulloch, Chairman of the National Labor Relations Board, in Hearings on Review of the
National Labor Relations Act Before the Special Subcommittee on Labor of the House Comm
on Education and Labor. 89th Cong., 2d Sess. 31, 32-34 (1966). Cf. PiUsbury Co. v. FTC, 354
F.2d 952 (5th Cir.), complaint dismissed on remand. Trade Gas. H 17,484, at 22,759 (1966).

= Landis Report 10. He goes on to note that many companies, able to pass such costs on to
consumers in the form of rate increases, lack any real incentive to press for administrative
reform. Id.

» H. Friendly, The Federal Administrative Agenhes : The need for Better Definition of
Standards (1962).

' Id. at 5-6.

«See N. MiNovv. Equal Time: The Private Broadcasters and the Public Interest 277-304
(1964) ; Hector, Problems of the CAB and the Independent Regulatory Commissions, 69 Yale
L.J. 931 (I960) ; Long, Proposed Changes in Administrative Law, 19 Svv'. L.J. 203 (1965) ;
Long, The Proposed New Administrative Procedure Act. 55 Geo. L.J. 761 (1967); Loevinger'
Book Review, 68, Colum. L. Rev. 371, 374-79 (1968).

"> Suggestions for Improvement of the Administrative Process: Letter to President Kennedy
from Newton N. Minow, Chairman, Federal Communications Commission, 15 Ad. L. Rev. 146, 147
(1963) (emphasis in original) [hereinafter cited as Minow Letter^. For comments in the
specific context of the FGC, see Farragut Television Corp., 8 F.G.G. 2d 279, 285-86 (1967)
(statement of Commissioner Johnson) ; Schwartz, Comparative Television and the Chancellor's

REC. 6. DELEGATION OF DECISION MAKING 127

cal conclusions.^"

The causes of these problems are complex and varied, differing
from agency to agency. Typically, however, delay in the disposi-
tion of adjudicatory proceeding is related at least to the grow-
ing, insistent press of business before regulatory agencies, lack
of adequate agency budgets and staff," and the substantive and
procedural complexity of proceedings — especially comparative
hearings — involving multiple parties and issues. Lack of adequate
policy formulation is typically related at least to "the inability
of the members of multimember commissions to reconcile differ-
ences among themselves and the press of adjudicatory business
demanding fairly prompt solution." ^- When there are frequent
changes in an agency's membership, this problem is aggravated."
Dean Landis described two additional factors stemming from the
burdensome demands made upon members of most administra-
tive agencies: the fact that "in adjudicatory matters, the drafting
of opinions is delegated [by the members of the agency] to
opinion writing sections or assistants so that the rationalization
upon which a purportedly informed decision rests is not truly
their own";'" and the fact that "briefs of counsel, findings of
hearing examiners, relevant portions of the basic records, are
rarely read by the individuals theoretically responsible for the
ultimate decision." ' ' One result, as Chairman Minow stated, "is
to not formulate the policy — and to postpone the policy decision
to resolution on a case-by-case basis which all too often means
inconsistent decisions with the public and the regulated industry
not knowing the ground rules. More important, its consequence
is that vital planning and policy measures are not undertaken." ^®

It would be simplisitic to suggest any single proposal as a
certain corrective for problems that have often seemed intract-

Foot. 47 Geo. L.J. 655 (1959) ; JaflFe, The Scandal in TV Licensing. Harpers Magazine, Sept.
1957, at 77.

10 Landis Report 22-24.

'* See Landis Report 6-7.

" Note, Intermediate Appellate Revieiv Boards for Administrative Agencies, 81 Harv. L. Rev.
1325.1326 (1968) (footnote omitted) .

" See Welborn, Presidents, Regulatory Commissioners, and Regulatory Policy, 15 J. Pub. Law
3 (1966).

" Landis Report 19-20. See also Great Lakes Airlines, Inc. v. CAB, 291 F.2d 354, 370 (9th
Cir.), cert, denied, 368 U.S. 890 (1961). Hector, Government by Anonymity: Who Writes Our
Regulatory Opinions?, 45 A. B.A.J. 1260 (1959) ; Westwood, The Davis Treatise: Meaning to
the Practitioner, 43 Minn. L. Rev. 607, 615-18 (1959).

'' Landis Report 20. Some scholars have cited the failure of (Jontcress to assure agencies a
mandate to resolve policy issues as another factor related to inadequate policy formulation.
See L. Jaffe, Judictal Control of Administratin-e Action 50 (1965).

^' Minoiv Letter 147 (emphasis in original). See also M. Bernstein, Regulating Business
BY Independent Ck)MMissioN 176-79 (1955).

128 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES

able.^^ But it would be imprudent to ignore procedures that some
agencies have found workable and effective in ameliorating these
problems. One such procedure is the intermediate appellate Re-
view Board, ^® The Federal Communications Commission and the
Interstate Commerce Commission, pursuant to specific statutory
authorization, have created Review Boards to hear appeals from
decisions of hearing examiners in adjudicatory cases. This article
centers upon the experience of the FCC Review Board. ^^ The
experience suggests that Review Boards have the capacity for
assisting administrative agencies in meeting some of the problems
outlined above.

The FCC Review Board

Structure

In 1961, Congress amended section 5(d) of the Federal Com-
munications Act to authorize the Federal Communications Com-
mission to create an intermediate appellate Review Board :

(1) When necessary to the proper functioning of the Commission and
the prompt and orderly conduct of its business, the Commission may, by
published rule or by order, delegate any of its functions [with certain
listed exceptions] to a panel of commissioners, an individual commis-
sioner, an employee board, or an individual employee, including func-
tions with respect to hearing, determining, ordering, certifying, report-
ing, or otherwise acting as to any work, business, or matter; except that
in delegating review functions to employees in cases of adjudication (as
defined in the Administrative Procedure Act) , the delegation in any such

"See, e.g., W. Gary, Poutics and the Regulatory AcENaES 125-39 (1967); L. Jaffe,
Judicial Control of Administrative Action 11-27, 49-51 (1965) ; Jaflfe, The Effective Limits
of the Administrative Process: A Reevaluation, 67 Harv. L. Rev. 1105 (1954).

*' The use of such boards was recommended by Dean Landis to President- Elect Kennedy.
Landis Report 85 (Recommendation No. 5).

«The ICC Review Board was created pursuant to 75 Stat. 517 (1961), 49 U.S.C. § 17 (1964).
Its work is discussed in Note, Intermediate Appellate Revietv Boards for Administrative Agen-
cies, 81 Harv. L. Rev. 1325, 1329-30 (1968). See also ABA Committee on Agency Adjudication,
Progress and Problems in Agency Adjudications, 14 Ad L. Rev. 239, 245-48 (1962) ; Auerbach,
Scope of Authority of Federal Administrative Agencies to Delegate Decision Making Authority
to Hearing Examiners, 48 Minn. L. Rev. 823, 845-48 (1964) ; Hutchinson, Improving Commis-
sion Organization and Procedure — Some Neiv Developments, 32 ICC Prac. J. 134 (1964) ;
Kahn, Reorganization of the I.C.C. — 1961, 29 ICC Prac. J. 586 (1962) ; Authority Delegated to
Finance Review Board by I.C.C, 29 ICC Prac. J. 608 (1962).

Three other agencies, the Civil Aeronautics Board, the Federal Trade Commission, and the
Federal Maritime Commission, have the authority, pursuant to Reorganization Plans, to dele-
gate review functions to an employee board. Reorganization Plan No. 3 of 1961, 75 Stat. 837
(1961). 49 U.S.C. § 1324 (1964) [CAB]; Reorganization Plan No. 4 of 1961, 75 Stat 837
(1961), 15 U.S.C. § 41 (1964) [FTC]; Reorganization Plan No. 7 of 1961, 75 Stat. 840, 46
U.S.C. § 1111 (1964) [FMC]. None has exercised the authority, although the CAB has created
a system of discretionary review procedures. See text accompanying notes 94-96 infra. For a
suggestion of the reasons for the failure of the FTC and FMC to act, see Auerbach, Scope of
Authority of Federal Administrative Agencies to Delegate Decision Making to Hearing Examin-
ers, 48 Minn. L. Rev. 823, 833-34 (1964). See also Note, The Progress of Federal Agency Re-
organization Under the Kennedy Administration, 48 Va. L. Rev. 300 (1962).

REC. 6. DELEGATION OF DECISION MAKING 129

case may be made only to an employee board consisting: of three or more
employees referred to in paragraph (8) of this subsection. Any such rule
or order may be adopted, amended, or rescinded only by a vote of a ma-
jority of the members of the Commission then holding office.""

Prior to this amendment, the Commission had been required by-
law to review all initial decisions of hearing examiners to which
exceptions had been filed, and to hear oral argument upon request.
This was obviously a time-consuming responsibility. The amend-
ment granted the Commission discretion to adopt intermediate
appellate review procedures if it believed they might help expedite
the disposition of adjudicatory cases; these procedures were in-
tended to enable members of the Commission to devote more of
their time to policy and planning and to the more significant
adjudicatory cases, primarily those involving issues of general
communications policy importance.-' The Commission took advan-
tage of the amendment and in June, 1962, adopted detailed regula-
tions establishing a Review Board.-' Four senior staff employees
were appointed to the Board; in 1964 its membership was in-
creased to five, its present strength.

The Review Board began functioning on August 1, 1962. Under
regulations issued by the Commission, it is authorized to act in
three general areas. (1) The Review Board hears appeals from
initial decisions of hearing examiners in all adjudicatory pro-
ceedings (including mixed adjudicative and rule-making proceed-
ings), except for those proceedings involving the renewal or
revocation of a station license in broadcast and Common Carrier
Radio Services;"' although section 5(d) would not prevent the
Commission from granting the Review Board jurisdiction over
such cases, the Commission apparently gave Congress informal
assurances at the time the amendment was enacted that review
of initial decisions in so-called "death sentence" cases would
remain directly in the Commission.^* (2) The Review Board passes
upon interlocutory appeals from rulings of hearing examiners;
these include evidentiary rulings and rulings upon petitions for
allowance of amendments to applications, petitions for extensions

^47 U.S.C. § 155(d) (1) (1964).

"H.R. Rep. No. 723, 87th Cong., 1st Sess. 1 (1961) ; S. Rep. No. 576. 87th Cong.. 1st Sess.
5 (1961). See Nathanson, Looking Backward 2000-1963: A Personal View of the Administrative
Conference, 1961-62, 16 Ad. L. Rev. 33 (1963).

"47 C.F.R. §§ 0.361-0.365: 1.101-1.117 (1968).

"47 C.F.R. § 0.365(a) (1968).

''' The creation of this exception to the Review Board's jurisdiction cannot be justified on
principle. The task of review in these cases is not distinguishable from that involved in cases
presently entrusted to the Review Board. The "life-or-death" interests concerned would better
be served not by removing these cases from the jurisdiction of the Review Board, but rather
by providing for their mandatory review by the Commission after Review Board consideration.

130 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES

of time, and Detitions to reopen the record.^^ (3) The Review Board
exercises original jurisdiction over two classes of interlocutory
matters: petitions to amend, modify, enlarge, or delete issues
upon which the case was designated for hearing by the Com-
mission,'6 and joint requests filed by broadcast applicants for the
approval of agreements looking toward the removal of a conflict
between their applications."

Although the Review Board, in reviewing initial decisions of
hearing examiners, is "authorized to perform all of the review
functions which would otherwise have been performed by the
Commission," ^s it does not have responsibility for the formulation
of general communications policy. It is required to decide all
matters coming before it on the basis of precedent and existing
policy.29 The Commission has reserved to itself the authority, in
cases raising novel or important issues of law or policy, to review
initial decisions directly.^"

Any person aggrieved by a decision of the Review Board
may file an application for review with the Commission.^*^ The
Commission's regulations require that an application for review
specify with particularity, from among the following, the fac-
tor (s) which warrant Commission consideration of the questions
presented:

(i) The action taken pursuant to delegated authority is in
conflict with statute, regulation, case precedent, or estab-
lished Commission policy.

(ii) The action involves a question of law or policy which
has not previously been resolved by the Commission.

(iii) The action involves application of a precedent or
policy which should be overturned or revised.

(iv) An erroneous finding as to an important or material
question of fact.

(v) Prejudicial procedural error.^-
The Commission may grant the application for review in whole

"47 C.F.R. § 0.365(c) (1968).

^^ See Fidelity Radio, Inc., 1 F.C.C. 2d 661 (1965) ; Atlantic Broadcasting Co., 5 F.C.C. 2d
717 (1966).

"47 C.F.R. § 0.365(b) (1968) ; see "What the Bible Says," Inc., 12 F.C.C. 2d 610 (1968) ;
Bay Broadcasting Co., 10 F.C.C. 2d 331 (1967) : Tinker, Inc., F.C.C. 2d 372 (1966).

2M7 C.F.R. § 0.361(d) (1968).

29 47 C.F.R. § 0.361(d) (1968). See also FCC, Review Board Progress Report, April 1965,
at 2.

3" 47 C.F.R. § 0.361 (a) and (b) (1968). Two recent cases in which the Commission exercised
this authority are Midwest Television, Inc., 13 F.C.C. 2d 478 (1968) (expansion of CATV
service into areas served by regular broadcasting), and Use of the Carterfone Device in Mes-
sage Toll Telephone Service, 13 F.C.C. 2d 420 (1968) (propriety of telephone company tariff
prohibitions against interconnections of customer-provided devices).

"47 U.S.C. § 155(d)(4) (1964) ; 47 C.F.R. § 1.115(a) (1968).

=2 47 C.F.R. § 1.115(b)(2) (1968).

REC. 6. DELEGATION OF DECISION MAKING 131

or in part, or may deny the application, without specifying rea-
sons for the action taken.^^ If the Commission denies the applica-
tion, the decision of the Review Board becomes the decision of the
Commission,'" which, if it is in other respects a final order, may
then be made subject to judicial review.'''

Performance

The Commission is plainly impressed with the utility of the
Review Board. In a progress report prepared in April, 1965, the
Commission appraised the Review Board's performance during
the first twenty-nine months of its existence and concluded that
it "has well served the purposes for which it was established, and
substantial benefits to the Commission and to parties to Commis-
sion proceedings have accrued from its operations." ^^ This judg-
ment has more recently been affirmed by several members of the
Commission,"

The Commission believes that two substantial benefits have
resulted from the creation of the Review Board: improvement
of the hearing process and saving of agency members' time.'^
They are worth considering separately.

First, establishment of the Board has benefited the hearing processes. The
members of the Board have been able to devote greater personal atten-
tion to cases, and to dispose of them more expeditiously than would have
been possible for the Commission virith its many other responsibilities.
The Board has handled a large number of difficult matters with great
competence, as indicated by the small number of appeals from its
decisions and by the small number of decisions reversed, revised, or
remanded by the Commission. Applications for review of Board actions
have been handled expeditiously, and no difficulty has been experienced by
the Commission in maintaining control over matters of policy."

This statement, of course, groups several factors. First, the
Review Board has been able to devote far more time and attention
to the reviewing function than members of the Commission had
been able to do in the past or could do now. Because of the
limited definition of their function, members of the Review Board,

"47 U.S.C. § 155(d)(5) (1964) ; 47 C.F.R. § 1.115(g) (1968).

="^47 U.S.C. § 155(d)(3) (1964).

"47 U.S.C. § 155(d)(7) (1964). .

TOG, Remew Board Procress Report, April 1965, at 5. See also Comments of the FCC in
Hearings on S. 1160, S. 1336. S. 1758 and S. 1879 Before the Subcomm. on Administrative
Practice and Procedure of the Senate Comm. on the Judiciary, 89th Cong., 1st Sess. 454 (1965).

"Comments of Chairman E. William Henry and Commissioners James J. Wadsworth and
Kenneth A. Cox. in Staff of the Subcomm. on Administrative Practice and Procedure of
THE Senate Comm. on the Judioary, 89th Cong., 2d Sess., Questionnaire Survey on Delay
IN Administrative Proceedings 35-40 (Comm. Print 1966).

'* FCC, Review Board Progress Report, April 1965, at 5-6.

"47 U.S.C. § 155(d)(5) (1964) : 47 C.F.R. § 1.115(g) (1968).

132 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES

as the Commission soundly concluded, "can participate much more
actively and extensively in discharging their review functions
than can members of the Commission." *" The consequence is that
the members of the Review Board are prepared for the oral
argument in every case; they have read the pleadings and the
briefs and are informed as to the facts and issues involved. Oral
argument thus becomes a meaningful dialogue between advocate
and decision-maker ; in this respect the Board's practice resembles
that of a conscientious appellate court. It is understandable that
lawyers regard oral argument before the Review Board as more
valuable than it is before the Commission.

Second, the Review Board's decisions " have been of high qual-
ity. This quality is the result in part of the fact that responsi-
bility for the preparation of every opinion is assigned to an
individual member of the Board, under whose name the opinion
will appear."-' Occasionally the Review Board member responsible
for the preparation of an opinion will draft it himself; more
frequently, he will supervise the preparation of a draft opinion
by a member of the Review Board's staff. Drafts are then
circujated among the other members of the Review Board. The
Commission has observed, "The desirable merger of the opinion-
writing and decision-making processes is feasible in this degree
because members of the Board, with their responsibilities limited
to adjudicatory hearing cases, can devote themselves for appre-
ciable periods to the preparation of individual opinions." "^

Although the opinion-writing process retains some characteris-
tics of the "institutional decision," " the members of the Review
Board participate more intensively and effectively in the prep-
aration of the written decision than do the members of most
agencies. One result is that decisions of the Review Board typi-
cally meet rather than avoid complex issues and support their
conclusions with reasoning and relevant authority-^^ Changes of
position are not "slipped into an opinion in such a way that only
careful readers would ever know what had happened, without
articulation of reasons, and with the prior authorities not over-

*> FCC, Review Board Progress Report, April 1965, at 5.

*^ The decisions of the Review Board are published in the Federal Communications Commis-
sion Reports.
^ FCC, Review Board Progress Report, April 1965, at 5.

^* See 2 K. Davis, Administrative Law Treatise, eh. 11 (1958).

^^ See, e.g.. Northeast Broadcasting, Inc. v. FCC, 400 F.2d 749, 758 (D.C. Cir. 1968) ("The
Review Board's Decision was detailed, comprehensive and expansive in its discussion of the
evidence and the relative weight it attached thereto, and concise and precise as to its ruling
and the reasons therefor.")

REC. 6. DELEGATION OF DECISION MAKING 133

ruled," ""' as Judge Friendly complained of a series of FCC opin-
ions. Among lawyers who regularly appear before the Commis-
sion, there seems to be general agreement that decisions of the
Review Board are more predictable than were decisions of the
Commission in similar matters before establishment of the Board.
They reach results that are significantly more consistent with
precedent and existing policy and that adhere more closely to
the record facts.

These achievements stem in part from the limits on the Review
Board's power. The Board lacks the authority to enter new policy
areas. This means that it has no occasion to discuss policy prob-
lems with industry representatives. The resulting isolation and
anonymity is a salutary protection against hints or charges of
improper influence. The Board also lacks the authority to give
play or weight to its own expertise in assessing, for example, the
comparative qualifications of competing applicants for a broad-
cast license. This means, as one lawyer has said, that the Review
Board will almost always hold for the applicant whose case is
best supported in the record in light of the factors that prior
Commission decisions have made relevant ; conversely, the Review
Board is quite unlikely to rely upon the extra-record intimations
that lawyers are accustomed to see play a dispositive role at
the Commission level.

It should be said, however, that decisions of the Review Board
reflect some of the defects of their virtues. Review Board deci-
sions sometimes tend to be scholastic in their reliance upon
precedent, formalistic in their insistence upon compliance with
procedural and evidentiary rules, and colorless in their treatment
of policy issues."' Given the Review Board's precise mandate and
its position in the Commission's decisional structure, it would
be surprising if such tendencies did not appear.

One measure of the Commission's high regard for the quality
of Review Board decisions may be seen in its reviewing practices.
The Commission has not often granted petitions to review deci-
sions of the Review Board and has even less frequently reversed
or remanded Review Board decisions.

During the period from August 1, 1962, to December 31, 1967,
the Review Board decided 175 appeals from initial decisions.
Petitions for review were filed with the Commission in 86 cases.
The Commission agreed to review only 13 percent of the Review

«H. Friendly, The Federal Administrati\-e AcENaEs: The Need for Better Definition
OF Standards 63 (1962).

" Cf. Fitzgerald, Trends in Federal Administrative Procedure. 19 Sw. L.J. 239, 264 (1965) ;
Atlantic Broadcasting Co., 5 F.C.C. 2d 717, 718 (1966).

134 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES

Board's decisions: it granted 23 petitions, denied 61, and did not
pass on 2 that were withdrawn. Broken down by year, the figures
more graphically indicate how infrequently the Commission has
agreed to hear appeals from Review Board decisions. During fiscal
1963, the Commission granted no petitions for review; during
fiscal 1964, it granted 2 petitions; during fiscal 1965, it granted
6 petitions; during fiscal 1966, it granted 9 petitions; during
fiscal 1967, it granted 4 petitions; and during the first half of
fiscal 1968, it granted 2 petitions. Of the 23 cases that the Com-
mission agreed to hear during this period, the decision of the
Review Board was affirmed in 9 cases, reversed in 9 cases, and
remanded in 4 cases; one case had not been decided by the end
of the period. ^^

The Commission's use of the power of review has thus been
sparing, particularly since review is to be expected in a certain
number of cases that are of general communications importance,
raise new issues of policy, or make a persuasive claim for chang-
ing an existing statement of policy.*'' Sparing use by the Com-
mission of the power of review is crucial to the Review Board's
prestige and effectiveness. The capacity of a Review Board to
reduce the average length of time that an agency requires to
dispose of proceedings depends in part, as the next few para-
graphs suggest, upon how frequently the members of the agency
elect to review decisions of the Review Board. And this depends
in largest part — the argument has come full circle — upon the
quality of Review Board decisions.

In the Commission's language, the Review Board has been
able "to dispose of [cases] more expeditiously, than would have
been possible for the Commission with its many other responsi-
bilities." s" Statistical tables supplied by the Commission appear
to support this contention." During fiscal 1961, before the Review
Board had been created, the Commission required an average
time of 262 days from the date on which the initial decision was
issued to dispose of an appeal from an initial decision of a hearing
examiner. By comparison, the Review Board, during the first 29
months of its existence, required an average time of 172 days to
dispose of the same appeal — an average saving of almost three
months per proceeding. The statistics with respect to interlocu-

■** These statistics and the ones that follow are based upon information supplied by Donald J.
Berkemeyer, Chairman of the Review Board. Statistics may also be found in FCC, Review
Board Progress Report, April 1965.

'"' Some such cases, of course, will be reviewed directly by the Commission. See note 30
supra and accompanying text.

*" FCC, Review Board Progress Report, April 1965, at 5.

" Id., Tables No. 1, 2, and 3. The figures that follow are rounded to the nearest day.

REC. (5. DELEGATION OF DECISION MAKING 135

tory actions are of similar proportions. During fiscal 1961, the
Commission required an average time of 66 days to dispose of an
interlocutory matter. The Review Board, during its first 29
months, required an average time of 36 days, thus saving about
one month per case.

The statistics with respect to the Review Board's experience
for the years subsequent to 1964 are of a similar order. During
fiscal 1965, the average length of time required to dispose of an
appeal from an initial decision was 228 days; during fiscal 1966,
it was 267 days; during fiscal 1967, it was 244 days; and during
fiscal 1968, it was 210 days. The statistics for these years with
respect to the disposition of interlocutory matters indicate aver-
age time periods of 40 days per case during fiscal 1965; 43 days
during fiscal 1966; 38 days during fiscal 1967; and 43 days
during the first half of fiscal 1968.

As these statistics reveal, the average time the Review Board
has required to dispose of matters before it has fluctuated in
recent years. These fluctuations have coincided with an enlarge-
ment of the jurisdiction of the Review Board and a want of
sufl^cient staff assistance.

It is important to note that the statistics do not take account
of the time consumed when a party petitions the Commission to
review the decision of the Review Board. If such a petition is
filed," the saving in days is reduced by the time required by the
Commission to act on the application. If the Commission denies
the petition, time may be saved over the average pre-Review
Board experience, not least because the Federal Communications
Act allows the Commission to deny such petitions "without speci-
fying any reasons therefor." ■■' However, if the Commission grants
the petition and reviews the decision of the Review Board on
the merits, the total amount of time required for action by the
Review Board and the Commission will almost certainly be
greater than the time that would have been required if the initial
decision had been reviewed directly by the Commission."^*

In 1966, Chariman E. William Henry said that the Review
Board "has been able to decide such cases [of adjudication] more
expeditiously than was previously the case when a Commission
decision was required." ^''' Although the Review Board in recent

"It must be filed within 30 days of the decision. 47 C.F.R. § 1.115(d) (1968).

"47 U.S.C. § 155(d)(5) (1964).

'^ FCC, Revietw Board Progress Report, April 1965, Table No. 3, n.l. More thorough con-
sideration of the issues, however, may be a countervailing benefit.

"Comments of Chairman E. William Henry, in Staff of the Subcomm. on Administrative
Practice and Procedure of the Senate Comm. on the Judiciary, 89th Cong., 2d Sess.,
Questionnaire Survey on Delay in Administrative Proceedings 35, 36 (Comm. Print 1966).

136 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES

years has found itself taking increasing amounts of time to decide
matters before it, such figures cannot of course fairly be com-
pared with the Commission's 1961 statistics. No one can know
how long today's Commission, with new responsibilities in the
areas of CATV and satellite communications, would require, in
the absence of a Review Board, to decide adjudicatory appeals.
In addition to improving the agency's hearing processes, the
Commission regards creation of the Review Board as having
resulted in a second substantial benefit :

[By virtue of delegations made to the Board in hearing proceedings,
the Commission has been enabled to devote a significantly larger portion
of its time and energies to major matters of policy and planning and to
cases of adjudication involving issues of general communications impor-
tance. Wie cannot stress the importance of this benefit too strongly. There
is an ever-increasing number of complex and vital policy matters coming
before the Commission because of the changing nature of the communica-
tions field {e.g., CATV, space satellite, network television procurement
and production). These matters call for close study by the Commission
and frequent meetings of Commissioners where there can be the neces-
sary exchange of views and evolvement of policy. The Review Board, by
taking over the routine hearing cases, has contributed significantly to the
Commission's ability to devote more time and effort to these important
policy issues.^'

Statistics appended to the Commission's progress report give
some suggestion of the amount of time that creation of the Re-
view Board has freed for members of the agency to devote to du-
ties other than adjudication. During the 29-month period (March
1, 1960 to July 31, 1962) immediately preceding creation of the
Review Board, the Commission devoted a total of 45 days or
partial days, representing 130 hours, to hearing oral argument.
By comparison, during the 29-month period immediately follow-
ing creation of the Review Board (August 1, 1962 to December
31, 1964), the Commission devoted only 29 days or partial days,
representing 81 hours, to hearing oral argument."

These figures understate the savings in Commission time that
resulted from creation of the Review Board. They do not refiect
the concomitant savings in time that a reduction in adjudicatory
appellate responsibilities produces in preparing for oral argu-
ment, deliberating, and drafting final opinions. Furthermore, these
figures include cases within the Review Board's jurisdiction that
were designated for hearing before the Review Board was estab-
lished and, under a "grandfather clause," retained on the Com-
mission's docket, as well as television cases, which were not

"» FCC, Review Board Progress Report, April 1965, at 6 (footnote omitted).
" FCC, Review Board Progress Report, April 1965, Table No. 4.

REC. 6. DELEGATION OF DECISION MAKING 137

placed within the Review Board's jurisdiction until June 15,

ige^-^^^

It has become clear in recent years that what the Commission
calls the "second substantial benefit"— freeing agency members
from the demands of many adjudicatory appeals — ought to be
regarded as the Review Board's most significant contribution.

The experience of the Federal Communications Commission
suggests that creation of an intermediate appellate Review Board
can bring significant benefits to the regulatory process. A Review
Board can apply agency policy with more consistency and more
detailed attention to the record than can the agency members
themselves. A Review Board can reduce the average time required
by the agency to dispose of a proceeding. Most important, a
Review Board can free the time of agency members to consider
matters of policy and planning by disposing of an absolute num-
ber of adjudications that the members of the agency need not
decide. These benefits are, as the Commission properly character-
ized them, substantial.

DEFINITION OF A REVIEW BOARD'S ROLE

Two Models of Review Board

The performance of the FCC Review Board has been shaped
by its structure, jurisdiction, and authority. Before deciding to
create an intermediate appellate Review Board, an agency must
make some preliminary judgments about the function the Board
is to perform. Unless judgments about form and function are
thoughtfully reached, the establishment of a Review Board may
only add another stage of administrative proceedings, achieving
no countervailing gain. The agency's goal must be to identify and
describe a differentiated function for the Board, and to give it a
mandate that will enable it to perform that function well.

This section of the study will explore some of the considerations
relevant to the decision to create a Review Board. In undertaking
this exploration, it will be useful to make reference to two models
of a Review Board— the "judicial model" and the "administrative
model." The terms lack precision; they do not correspond to an
absolute reality. But they provide a convenient framework for
describing two different conceptions of the function that a Review
Board might serve. The models do not of course exhaust the
possible conceptions of a Review Board; nor should they be re-
garded as describing even polar conceptions, for they do not.

^ 2 FCC, Review Board Progress Report, April 1965, Table No. 4, n.l.

138 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES

The models are intended only to suggest that value judgments
concerning the appropriate functions of a Review Board arei
closely related to the details of the Board's structure, jurisdiction,
and authority.

The judicial model conceives the function of a Review Board
as primarily deciding appeals from initial decisions of hearing
examiners in adjudicative cases as nearly as possible on the basis
of precedent and formal statements of agency policy. The Board
is expected to apply existing law rather than to make new policy,
although of necessity it "may consider the extension of present
policies to include new factual situations." ^® When policy issues
of first impression arise, the Board is expected to certify them to
the members of the agency for decision. The judicial model posits
the Board's function in deciding questions of law as analogous to i
that of a lower court subject to review by an appellate tribunal. ]

The administrative model conceives the function of a Review j
Board as blending at least some of the roles — deciding appeals in
adjudicative cases as well as formulating policy — that members
of the agency perform. The Board is expected to speak the
agency's mind, not merely to rephrase prior statements ; to decide
issues as it believes the agency would decide them, whether or
not precedent reaches that far. The Board is expected to con-
tribute through its work to the formulation, rather than the
mere application, of agency policy. Because its job is to serve i
almost as an alter ego of the agency, a Review Board based on \
the administrative model would have a wider jurisdiction and
greater substantive authority than one based on the judicial
model.

Jurisdiction

In creating a Review Board, one of the most important concerns
that an agency must confront is the appropriate definition of the !
Review Board's jurisdiction. The Federal Communications Act
authorized the Commission to create a Review Board to perform ,
"any of its functions . . . including functions with respect to ',
hearing, determining, ordering, certifying, reporting, or other-
wise acting as to any work, business, or matter." ®° The Commis-
sion elected to create a Review Board based upon the judicial mod-
el. It granted the Review Board authority to act in three general
areas: review of initial decisions of hearing examiners in all ad-
judicative matters, including mixed adjudicative and rulemaking

59 Charles County Broadcasting Co., 25 P & F Radio Reg. 903, 907 (1963).
80 47 U.S.C § 155(d)(1) (1964).

REC. 6. DELEGATION OF DECISION MAKING 139

proceedings; interlocutory appeals from rulings of hearing ex-
aminers; and original jurisdiction in two important areas of in-
terlocutory matters. The decisions that the Federal Communica-
tions Commission made in defining the jurisdiction of its Review
Board may usefully be examined.

In amending the Federal Communications Act to authorize the
creation of a Review Board, Congress did not attempt to describe
the jurisdiction of the Review Board. Instead, it gave the Com-
mission complete freedom to determine which of its functions
should be delegated to the Review Board. This freedom has allowed
the Commission to adjust the Review Board's jurisdiction in light
of the Board's performance and of changing exigencies within the
Commission. Thus, in 1964 the Commission enlarged the Review
Board's authority to review additional categories of initial de-
cisions.*'^ It was the Commission's freedom to make these changes
on its own motion that made them possible at all. Had Congress
defined the Review Board's jurisdiction, redefinition would have
required an amendment to the statute ; it is plain that the legisla-
tive process could not fashion such redefinitions with either the
sensitivity or the celerity of an agency.

If a Review Board is to make a significant contribution
toward expediting agency decisions and freeing agency members'
time, the agency must be prepared to grant it a subject matter
jurisdiction that accounts for a large number of cases and to allow
most of its decisions to become final. The success of the FCC
Review Board, as the discussion above indicates,*^ supports this
principle.

Equally crucial to the success of a Review Board will be the
capacity of the members of the agency to identify the classes of
cases appropriate for intermediate appellate review procedures.
If the members of the agency fail in this task, creation of a
Review Board will only add to delay. What principles are relevant
to making this determination? One commentator has written:

[M]any of the very complex cases such as route cases in the CAB or
large merger cases before the ICC depend on the relevance and interrela-
tion of a very large number of "economic facts" such as the effect of the
merger or new route, or the validity of a complicated cost study.

. . . The agency, in evaluating the appropriateness of a new route,
for example, is really performing the managerial function of resource al-
location; the ultimate decision involves a judgment concerning the
relationship among an open-ended series of variables, and the final
determination in the particular case cannot be deduced from a generally
applicable rule. Policy formulation in the legislative sense is not possible;

"'47 C.F.R J 0.365 (1968).

" See text accompanying notes 48-55 svpra.

140 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES

a system of intermediate appellate review cannot reduce delay in the
disposition of cases without compelling the agency to formulate artificial
guidelines for the allocation of industry resources."'

The jurisdiction that the Federal Communications Commis-
sion gave to its Review Board is appropriate for a Review Board
based on the judicial model because it is limited to cases involv-
ing policy application rather than policy formulation. An agency
whose docket includes a high percentage of cases involving policy
formulation might benefit only from a Review Board based upon
the administrative model ; such a Review Board would require
jurisdiction over quasi-legislative or rulemaking proceedings.

Review of the Review Board

The amendment to the Federal Communications Act that au-
thorized creation of a Review Board also provides for review of
its decisions. Any person aggrieved may apply to the Commission
for review ; the Commission may also review Board decisions on its
own motion. Absent such review, a decision or order of the Board
becomes that of the Commission. Application for review is a
condition precedent to judicial review of the Commission's
action.'''

The most notable aspect of these provisions is the freedom and
responsibility left the Commission to design a system to review
decisions of the Review Board. By providing that a decision of the
Review Board shall become the decision of the Commission ab-
sent such review, the statute grants the Commission the freedom

" Note, Intermediate Appellate Review Boards for Administrative Agencies, 81 Harv. L.
Rev. 1325, 1331 (1968) (footnote omitted).
"47 U.S.C. § 155(d) provides in part:

(3) Any order, decision, report, or action made or taken pursuant to any such dele-
gation, unless reviewed as provided in paragraph (4) of this subsection, shall have the
same force and effect, and shall be made, evidenced, and enforced in the same manner,
as orders, decisions, reports, or other actions of the Commission.

(4) Any person aggrieved by any such order, desion, report or action may file an
application for review by the Commission within such time and in such manner as the
Commission shall prescribe, and every such application shall be passed upon by the
Commission. The Commission, on its own initiative, may review in whole or in part,
at such time and in such manner as it shall determine, any order, decision, report, or
action made or taken pursuant to any delegation under paragraph (1) of this subsection.

(5) In passing upon applications for review, the Commission may grant in whole
or in part, or deny such applications without specifying any reasons therefor. No such
application for review shall rely on questions of fact or law upon which the panel of com-
missioners, individual commissioner, employee board, or individual employee has been
afforded no opportunity to pass.

(6) If the Commission grants the application for review, it may affirm, modify, or
set aside the order, decision, report, or action, or it may order a rehearing upon such
order, decision, report, or action in accordance with section 405 of this title.

(7) The filing of an application for review under this subsection shall be a condition
precedent to judicial review of any order, decision, report, or action made or taken
pursuant to a delegation under paragraph (1) of this subsection.

REC. 6. DELEGATION OF DECISION MAKING 141

to make final any Review Board decisions it chooses. By providing
that review of Review Board decisions shall be "in such manner
as the Commission shall prescribe," the statute grants the Com-
mission the responsibility of selecting wise principles of review/'^'
An examination of the principles selected by the Commission
is instructive. Under the Commission's regulations, any person
aggrieved by a decision of the Review Board may file an applica-
tion requesting review by the Commission :

(b) (2) The application for review shall specify with particularity,
from among the following, the factor (s) which warrant Commission con-
sideration of the questions presented :

(i) The action taken pursuant to delegated authority is in conflict
with statute, regulation, case precedent, or established Commission
policy.

(ii) The action involves a question of law or policy which has not
previously been resolved by the Commission.

(iii) The action involves application of a precedent or policy
which should be overturned or revised.

(iv) An erroneous finding as to an important or material question
of fact.

(v) Prejudicial procedural error.

(c) No application for review will be granted if it relies on questions
of fact or law upon which the designated authority has been afforded no
opportunity to pass.®*

A note to the Commission's regulations advises persons seeking
review by the Commission that "the application for review should
be prepared with the understanding that its purpose is not to
obtain a Commission decision on the merits of the issues but
rather to convince the Commission to review those issues." *''

The regulations make plain that the Commission has the au-
thority on its own motion to order the record of a proceeding
before it for review ; ^^ it is not dependent upon the motion of a
person aggrieved. Once an application for review has been filed
with the Commission, it "may grant the application for review in

«5 Lawyers who regularly practice before an agency may be concerned that creation of a
Review Board will reduce their access to members of the agency. So long as a petition for
review may be filed with the members of the agency, the substance of this concern is that
creation of a Review Board will reduce a lawyer's opportunity to argue important issues
of administrative policy to the presidential appointees who are finally responsible for the
formulation of agency policy. This concern can be greatly tempered, however, by wise
agency action in granting and denying review of decisions below. Indeed, agencies are
likely to be as sensitive as their practitioners to the existence of policy issues that require
responsible consideration at the very top ; members of agencies are not likely, by design or in-
advertence, to forfeit their authority to decide these issues. An agency can also temper this
concern by following the procedure that the FCC followed in establishing its Review Board
of soliciting comments on its proposed regulations before making them final. See Fitzgerald,
Trends in Federal Administrative Procedure. 19 Sw. L.J. 239 262 (1965).

»«47 C.F.R. § 1.115 (1968).

«M7 C.F.R. § 1.115 (1968).

"8 47 C.F.R. § 1.117(a) (1968).

142 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES

whole or in part, or may deny the application, without specifying
reasons for the action taken." '^^ If the Commission grants the
application for review, "it may order such further procedure, in-
cluding briefs and oral argument, as it may deem useful" ^° and
may affirm, reverse, modify, or set aside the Review Board's action
or may remand the proceeding for reconsideration.^^

These regulations give the Commission complete control over
selection of cases for review. They do not require the Commission
to grant an application for review in any case; this means the
Commission can realize the time-freeing potential of the Review
Board to the extent it chooses. The regulations do not prohibit
the Commission from granting an application for review in any
case and they allow the Commission to bring up cases for review
on its own motion; this means the Commission has authority to
place its imprint on the aggregate work product of the Review
Board.

Review of decisions of the Review Board is thus totally at the
option of the Commission. There is much to be said for this
arrangement. First, the Commission cannot be committed by Re-
view Board action to a position that the members of the agency
do not share. The Commission's regulations take full account of
Professor Davis' view that "the policy judgment should be an easy
one that no one but the Presidential appointees can have final
responsibility for what is done in the name of an agency. The
agency heads should have power to delegate, but they should
lack power to delegate in such a way as to deprive themselves of
their residual power." "

Second, the Commission cannot be bound by findings of fact
with which it disagrees, even if the hearing examiner and the
Review Board have concurred in finding them. The Commission
retains, in the language of the Administrative Procedure Act,
"all the powers which it would have in making the initial de-
cision." " Retention by the Commission of plenary power to resolve
issues of material fact is preferable to any limitation by such
formulations as "unless clearly erroneous" or "unless contrary to
the weight of the evidence." Chairman McCulloch of the National
Labor Relations Board has pointed out that "in many cases ques-

«»47 C.F.R. § 1.115 (g) (1968).

™47 C.F.R. § 1.115(h) (1968).

"47 C.F.R. § 1.115(i) (1968).

" Statement of Kenneth C. Davis, in Hearings on S. 1663 Before the Subcomm. on
Administrative Practice and Procedure of the Senate Comm. on the Judiciary, 88th Cong., 2d
Sess. 256 (1964).

" Administrative Procedure Act § 8, 80 Stat. 387, 5 U.S.C. § 557(b) (Supp. Ill, 1968).

REC. 6. DELEGATION OF DECISION MAKING 143

tiorivS of law, policy, and fact are intermingled." "' Wise resolution
of questions of law and policy may be thwarted if an agency lacks
the authority to disagree with the Review Board's evaluation of
intermingled questions of fact.

Third, the Commission cannot be precluded from reviewing a
case merely because the grounds upon which review is sought do
not meet the suggested criteria for granting an application for
review. The Commission might, for example, choose to review a
proceeding because the proposed agency action involves severe
consequences for a party. There is a symbolic value in such re-
view — attention by presidential appointees to individual instances
of special hardship — which makes its retention important. A sys-
tem that limited review by agency members to specified grounds
or specified issues could deny recognition to this value.

Problems in Establishing a Review Board
Appointment

A Review Board will be valuable only if an agency is prepared
to make first-rate appointments to the Board. There can be no
compromise with this principle if the Review Board is to win
respect or acceptance from hearing examiners, the agency's staff,
and the practicing bar. If the Review Board fails to win both
respect and acceptance, pressures to abolish it will gather.

The success of the FCC Review Board rests in part on the fact
that the original appointees (all of whom still serve) are persons of
undoubted ability and extensive experience. All five had achieved
high position within the agency before being named to the Review
Board. '"^ They brought varied experience to their joint work ; they
were, in the statutory language, "qualified by reason of their
training, experience, and competence, to perform such review
functions." "^

The FCC's decision to name senior staff employees to the
Review Board undoubtedly thinned the ranks at a very important
level. But the price had to be paid; it gave an earnest of the
agency's commitment to making the Review Board work. Ad-
herence to this commitment will not exact as great a price in the

''* Statement of Frank W. McCulloch, Chairman of the National Labor Relations Board, in
Hearings on S. 518 Before the Subcomm. on Adminittrative Practice and Procedure of the
Senate Comm. on the Judiciary, 90th Cong., Ist Sess. 223 (1967).

" Two had served as Chief of the Office of Opinions and Review, one had been Chief of the
Renewal and Transfer Division of the Broadcast Bureau, one had been Assistant General
Counsel in charge of the Regulatory Division, and one had been an Engineering Assistant to a
Commissioner.

"47 U.S.C. § 155(d)(8) (1964).

144 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES

future ; once the members of the original Board have been named,
vacancies can be expected to occur one at a time.

Four further comments about the selection of Review Board
members may be worth making. First, an agency may think it
desirable on occasion to select a hearing examiner to serve on its
Review Board. Some of the arguments supporting the occasional
selection of a hearing examiner are similar to those supporting
the occasional selection of a trial judge to serve on an appellate
court. Persons experienced in the discipline of finding facts bring
a useful and particularized expertise to the review function. The
possibility of promotion is valuable both in attracting able men
to the corps of hearing examiners and in sustaining their morale
after they undertake service. And finally, hearing examiners will
more tolerantly accept reversals of their decisions when at least
one of the Review Board members has first-hand knowledge of
the conditions under which examiners work.

Second, the members of an agency may think it desirable on
occasion to select a non-lawyer, such as an engineer or a rate
expert, to serve on its Review Board. The selection of a non-
lawyer may be particularly appropriate when sophisticated
technical expertise is necessary for resolution of cases within
the Review Board's jurisdiction. Although technical experts
could be assigned to the Review Board's staff, an agency might
well conclude that Board members are more likely to listen
to a technical expert if he is a colleague and peer rather than a
staff subordinate. The decision of the FCC Review Board, com-
posed of four lawyers and an engineer, to sit in ten randomly-
selected panels of three means that some panels consist of three
lawyers while others consist of two lawyers and an engineer.
Lawyers who regularly practice before the FCC do not seem to
regard the difference as significant. This suggests that there
should not be an a priori bar to the selection of a non-lawyer
to serve on a Review Board even if it is constructed on the
judicial model.

Third, an agency ought not regard itself as limited to selecting
only senior staff employees to serve on its Review Board. The
test of selection must be suitability to perform the Review
Board's functions. Some senior staff employees ably suited for
their present responsibilities may not have the particular quali-
ties that service on the Review Board will require; more junior
employees may possess these qualities. Conversely, an agency may
think it desirable to have a Commissioner serve on the Review
Board, particularly if its functions approximate those of the
administrative model. It should be noted, however, that the

REC. 6. DELEGATION OF DECISION MAKING 145

presence of a Commissioner — whose party affiliation would be a

matter of public record — would prevent the Review Board on

I which he served from having the bipartisan character that

' Congress has typically required for actions by presidential ap-

i pointees;" in addition, the presence of a Commissioner might

I inhibit his Review Board colleagues from disagreeing with him

and deter his colleagues on the agency from reversing Review

Board decisions in which he paiticipated.

Fourth, an agency's commitment to the theory of a Review
! Board will be tested when a vacancy occurs, perhaps several
years after the Board has been created, perhaps when several
new members sit on the agency. It is imperative that an agency,
in filling the vacancy, not succumb to the false assumption that
> the Review Board has become an institution able to perform its
function and retain its authority without regard to the quality
of the appointment made. An agency that uses Review Board
vacancies to solve problems presented by staff employees who
have not worked out well in their present positions will sub-
stantially weaken the Review Board.

j Statics and Tenure

The GS status of Review Board members is directly related to
the quality of persons who will accept service on the Review
Board and to the Review Board's ability to command respect
within the agency and without. Unless staff members and the
practicing bar regard appointment to the Review Board as a
promotion to a very senior position in the Civil Service hierarchy,
the prestige and authority of the Review Board will suffer.

The Federal Communications Act requires that Review Board
members "be in a grade classification or salary level commensu-
rate with their important duties, and in no event less than the
grade classification or salary level of the employee or employees
whose actions are to be reviewed." "' Hearing examiners at the
FCC, as in most other places in the federal government, hold
GS-16 positions. All five members of the Review Board hold
GS-17 grade classifications. Although the statutory requirement
is met as long as members of the Review Board hold GS-16
grade classifications, the elevation in grade classification is ob-
viously desirable.

By comparison, the Interstate Commerce Act does not place
grade classification requirements on appointments to ICC Review

"See. e.g.. Federal Communications Act § 154(b), 47 U.S.C. § 154(b) (1964); Federal Trade
Commission Act § 1, 15 U.S.C. § 41 (1964).
"47 U.S.C. § 155(d) (8) (1964).

146 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES

Boards. None of the fifteen members of the agency's five Review
Boards holds a GS-17 position, and only four chairmen hold
GS-16 positions; the fifth chairman and the remaining ten mem-
bers hold GS-15 positions. It is not surprising that the ICC has
great difficulty in persuading GS-16 hearing examiners to take
GS-15 or GS-16 Review Board positions, particularly in view
of the greater tenure protections that examiners enjoy under the
Administrative Procedure Act."^ This problem is more easily
described than remedied, since most agencies will have only a
limited number of super-grades (GS-16 through -18) available.

Related to the question of status is that of tenure. In creating a
Review Board, an agency will have to decide on the term of oflfice
of its members. Several alternatives are possible.

An agency might believe that Review Board members should
hold office indefinitely and be removable only for cause. This
arrangement would be similar to that enjoyed by hearing ex-
aminers. Such a judgment would be consistent with creation of
a Review Board based upon a judicial model. Such an essentially
tenured status — assuming that an agency could grant it in the
absence of specific statutory authority — would preserve the in-
dependence of Review Board members and protect them against
the fear (whether real or imagined) of reprisal for decisions
they have rendered. It would also, no doubt, be an attractive
factor in persuading able staff employees to accept appointment
to a Review Board.

The five members of the FCC Review Board have no formal
protection against removal, although an FCC regulation provides
that they shall "serve indefinitely" ; *" they are as vulnerable as
other staff employees to being shifted to other positions within
the agency. It seems clear, however, that institutional norms and
expectations have developed that would exert strong moral pres-
sure against removal of a member of the Review Board for any-
thing less than substantial reasons. This may suggest that Review
Board members performing essentially judicial functions can
achieve significant de facto protection against removal without
good cause, even if formal provision granting such protection is
not or cannot be made.

The fact that members of the FCC Review Board have GS-17
status also serves as a deterrent to removal. They could not be
shifted to other positions within the agency without being re-

™ Section 11 of the Administrative Procedure Act provides that a hearing examiner "may be
removed by the agency in which he is employed only for good cause established and determined
by the Civil Service Commission on the record after opportunity for hearing." 80 Stat. 528, 5
U.S.C. § 7521 (Supp. Ill, 1968).

«'47 C.F.R. § 0.361(e) (1968).

REC. 6. DELEGATION OF DECISION MAKING 147

quired to accept a lower grade classification ; an agency is likely
to hesitate before exacting such a sacrifice. Granting a GS-17
status to Review Board members may provide a protection
against removal which is similar to that enjoyed by hearing
examiners, without severely restricting an agency's power to
make changes in Review Board membership in unusual situations.

An agency, of course, might believe that Review Board mem-
bers should be removable more readily than a "for good cause"
rule would allow. This arrangement would be consistent with
the creation of a Review Board designefd to approximate the
administrative model. It would allow the agency to change the
membership of the Review Board to reflect changes in the mem-
bership and philosophy of the agency itself. An agency might
adopt such an arrangement if it believed that a Review Board
could fulfill its purposes best when its members were sympathetic
with and responsive to the views of present agency members.
However, an agency's authority to bypass the Review Board
and directly review hearing examiners' decisions may minimize
the necessity of making Review Board members readily remov-
able in order to promptly implement changes in agency policy.

Other arrangements are also possible. Review Board members
might, for example, be appointed for a fixed term of years;
provision could be made for reappointment. An agency that
adopted such an arrangement could achieve certain gains in
flexibility and in the renewal of energy that a system of rotation
offers. An arrangement that contemplated rotating terms of serv-
ice might make it easier professionally for a Review Board
member to remain at the agency in another position when his
term expired.

Insvlation From Ex Parte Contacts

The degree to which Review Board members should be in-
sulated from contact with members of the agency or members
of the staflf will depend largely upon the function that the Review
Board is expected to perform. The more nearly the Review Board
is based upon the judicial model, the more appropriate it may
seem to insulate its members from discussions of cases pending
before it.

The FCC Review Board is insulated by several statutory pro-
visions and regulations. Section 409(c)(1) of the Federal Com-
munications Act provides :

In any case of adjudication (as defined in the Administrative Proce-
dure Act) which has been designated by the Commission for a hearing,
no person who has participated in the presentation or preparation for

148 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES

presentation of such case at the hearing or upon review shall (except to
the extent required for the disposition of ex parte matters as authorized i,
by law) directly or indirectly make any additional presentation respect-;
ing such case to the hearing officer or officers or to the Commission, or to i
any authority within the Commission to whom, in such case, review func- '
tions have been delegated by the Commission under section 155(d) (1) of
this title, unless upon notice and opportunity for all parties to
participate/'

This section represents a congressional judgment that interested
persons and agency staff members who have participated in the
preparation or presentation of a case should not have any ad-
ditional and ex parte contact with the authority that will decide
the case, whether it be the Review Board or the members of the
agency. In addition, section 155(d)(8) directs that Review Board
members

shall not be responsible to or subject to the supervision or direction of
any officer, employee, or agent engaged in the performance of investiga-
tive or prosecuting functions for any agency." !

These two statutory provisions are reinforced by an FCC I
regulation : j

Neither the Commission nor any of its members will discuss the merits i
of any matters pending before the Boai'd with the Board or any of its
members.*^ :

In practice, these provisions mean that members of the FCC
Review Board do not discuss the merits of specific cases pending
before them with anyone in the agency. One reason the Review ,
Board has been given its own staff of lawyers, opinion writers, i
and technical experts is to make unnecessary any consultation |
between Review Board members and agency employees who !
also serve the members of the agency. :

The manner in which the insulation of the FCC Review Board
has been achieved is consistent with the judicial model. A Review .
Board based on the administrative model might function dif- i
ferently. An agency creating such a Review Board might think j
it desirable to permit consultation on some occasions between j
members of the Review Board and members of the agency and j
its staff. Although it may be assumed that members of the i
Review Board would not discuss pending adjudicatory proceed-
ings with members of the agency or with the staff, such con- '
sulfation would not be inappropriate when a Review Board has ;
been delegated the task of rulemaking. i

"47 U.S.C. § 409(c)(1) (1964).
8=47 U.S.C. § 155(d)(8) (1964).
«'47 C.F.R. § 0.361(e) (1968).

REC. 6. DELEGATION OF DECISION MAKING 149

Because rulemaking proceedings often involve large issues of
policy and have relevance to significant areas of the agency's
jurisdiction, an agency might properly believe that Review Board
members ought not be insulated from staff members whose ex-
perience would be helpful in formulating a sound rule. Full access
to the agency's staff might also reduce the likelihood that the
agency would reject a Review Board decision based on the
months of costly proceedings typical of rulemaking. In addition,
a decision by an agency to grant the Review Board a significant
role in the formulation of rules may bring Review Board members
into an advantageous competition with other agency employees,
such as bureau chiefs, who otherwise would make the only recom-
mendations to members of the agency on the lines that new
policy should follow.

Response of Hearing Examiners

The decision to create a Review Board may cause concern
among an agency's hearing examiners. Professor Davis, comment-
ing in 1965 on experience at the FCC, said "Examiners, of
course, are opposed to the whole idea of the Review Board, for
they prefer the idea of limited review of examiners' initial de-
cisions." ^' The statement is probably less true today than it was
in 1965, largely because hearing examiners have learned that the
Review Board's success in the predictable application of stand-
ards has increased their opportunities to make decisions that will
not be appealed or will stand upon appeal.*''^

Nevertheless, the creation of a Review Board means that exam-
iners' decisions will be reviewed in the first instance by employees
of the agency rather than by presidential appointees ; examiners
may regard this as diminishing their stature in the agency's over-
all decision-making process.*''^ Sometimes it may mean, as it does
at the ICC, that decisions of GS-16 examiners will be reviewed
by GS-15 members of Review Boards. Sometimes it may mean,
as it does at the FCC, that examiners' decisions will be reviewed
by a Review Board whose membership does not include anyone
with experience as a hearing examiner. The members of the Re-
view Board may give the impression that they do not have com-

*M K. Davis, Administrative Law Treatise §9.05 (Supp. 1965). The Federal Trial
Examiners Conference opposed the legislation authorizing the FCC and ICC Review Boards.
Hearings Before the Subcomm. on Communicationa of the Senate Comm. on Commerce on
Reorganization of FCC. 87th Con., 1st Sess. 82-83 (1961).

'^Cf. E. Redford, National Regulatory Commissions: Need for a New Look 12-13 (1959).
But cf. text accompanying note 87 infra.

** See Auerbach, Scope of Authority of Federal Administrative Agencies to Delegate Decision
Making to Hearing Examiners, 48 MiNN. L. Rev. 823, 866 (1964).

150 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES

plete respect for the competence of hearing examiners; one
hearing examiner at the FCC reported to a Senate subcommittee
that the members of the Review Board "regard the initial deci-
sion as a point of departure. To them it is pretty much just
another pleading." «" Under these circumstances hearing exam-
iners may see the creation of a Review Board as a threat to their
status and prestige; the result may be a lowering of morale.
These are human concerns — perhaps they are inevitable — and
to some degree they can be met by sensible administration. They
may be accompanied, however, by a deeper concern impossible
to accommodate: the concern, plainly justified by the example of
the FCC Review Board, that a Review Board is more likely to
give intensive scrutiny to the record than members of the agency
typically do, and is more likely to notice procedural lapses, in-
sufllciencies of proof, and examiners' errors. This, of course, is
one of the functions of a Review Board.

The Desirability of Enabling Legislation

The success of the FCC Review Board raises the question of the
desirability of legislation that would extend the concept of in-
termediate appellate review procedures to other agencies. Pro-
posals calling for such an extension to most of the federal admin-
istrative agencies have been made in three recent sessions of
Congress.8« Few agencies have been opposed to permissive legisla-
tion that would enable agencies in their discretion to establish a
Review Board. Almost every agency has objected, however, to
blanket legislation that would compel agencies to establish a Re-
view Board; this has been true even when the proposed legisla-
tion has provided some statutory exceptions for circumstances in
which use of a Review Board might be unnecessary or inappro-
priate.^^

Extensive testimony offered at congressional hearings over a

'^ Comments of Thomas A. Donahue, in Staff of the Subcx)mm. on Administrative Practice
AND Procedure of the Senate Comm. on the Judiciary, 89th Cong., 2d Sess., Questionnaire
Survey on Delay in Administrative Proceedings 235 (Comm. Print 1966).

s»S. 1663, 88th Cong., 1st Sess. (1963) ; S. 1336, 89th Cong.. 1st Sess. (1965) ; S. 518, 90th
Cong., 1st Sess. (1967). S. 1336 passed the Senate but failed in the House. The most recent
proposal, S. 518, provided:

Except to the extent that the establishment of an agency appeal board is clearly
unwarranted by the number of proceedings in which exceptions are filed or that agency
appellate procedures have been otherwise provided by Congress: (A) Each agency shall
establish by rule one or more agency appeal boards composed of agency members, hearing
examiners (other than the presiding officer), or both.
S. 518, 90th Cong., 1st Sess. § 8(c) (2) (1967). See Byse, The Judicial Review Provisions of S.
518, The Proposed Administrative Procedure Act of 1967, 20 Ad. L. Rev. 198 (1968).

*' Note, Intermediate Appellate Revietv Boards for Administrative Agencies, 81 Harv. L. Rev.
1325, 1333 (1968).

REC. 6. DELEGATION OF DECISION MAKING 151

period of years has made clear that legislation compelling all
agencies to create Review Boards would be unwise. The basic
reason, subject to illustration by many examples, is that such
legislation would place the differentiated procedures of agencies
with disparate functions "in a straitjacket;" '"- it might not allow
an agency the flexibility, for example, of creating a Review Board
for certain classes of cases only, or for certain separable parts of
cases. Or it might require review procedures of agencies that have
no need of them.

Some agencies may have manageable workloads that do not
disable their members from giving adequate attention to their
adjudicatory and policy-making duties. Chairman White of the
Federal Power Commission told a Senate subcommittee in 1967,
"The Commission does not have many appeal proceedings. Thus,
29 examiners' decisions were rendered in 1966 and exceptions
were taken or review instituted on the Commission's own motion
in 25 cases. In my judgment, 25 contested gas and electric cases a
year do not justify the appeal board procedure, considering the
substantial expenditures of money and people that 'an appeal
board would require." ^^ When the members of an agency are called
upon to decide a relatively small volume of adjudicatory cases,
creation of a Review Board may be unnecessary either to expedite
the disposition of adjudicatory proceedings or to free the time of
agency members for policy-making tasks.

Most agencies, of course, have a greater number of appeals than
Chairman White describes for the Federal Power Commis-
sion. However, they may have devised procedures to make their
workloads manageable. The Securities and Exchange Commis-
sion, for example, has the power to control the number of cases
on its adjudicatory docket; its docket of contested hearings is
limited to cases that it elects to initiate. This is a power denied to
agencies such as the Federal Communications Commission that
must respond to applications and petitions filed by private parties.
By carefully limiting the number of cases that it brings, by some-
times chastising informally rather than proceeding to an adminis-
trative hearing, by inviting offers of settlement, by entering into
consent agreements, the Securities and Exchange Commission is
able to exercise a significant measure of control over its workload
and thereby increase its regulatory efficiency. However, "the fact
that a particular agency may be keeping abreast of its work does

" Comments of Chairman hee C. White, in Hearings on S. 518 Before the Subcomm. on
Administrative Practice and Procedure of the Senate Comm. on the Judiciary, 90th Cong., 1st
Sess. 189 (1967).

152 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES

not always indicate that it is making the wisest use of the time
and skills of its members and staff." ^- It may indicate instead
that the agency has artificially limited the size of its docket so
that its workload, although manageable, does not include enough
cases to allow it to effectuate the regulatory aims of the statute
entrusted to its administration.^^ Therefore, the fact that an
agency has succeeded in limiting its workload to a manageable
size will not always be inconsistent with the possibility that in-
termediate appellate review procedures are desirable.

Other agencies may seek to make their workloads more manage-
able by adopting discretionary review procedures at the agency
level. The Civil Aeronautics Board adopted such procedures in
1963 pursuant to authority granted by Reorganization Plan No. 3
of 1961 ; ^* several other agencies possess similar authority but
have not exercised it,^^ Discretionary review procedures allow
the members of an agency to limit their plenary consideration to
cases that raise issues of the greatest importance. ^^ An agency
should adopt such procedures only if it has sufficient confidence
in the work of its hearing examiners to allow a significant per-
centage of initial decisions to stand unreviewed. An agency which
believes that its hearing examiners merit such confidence also
might charge them with considerably more power over the conduct
of the hearing than they may now possess and might limit time-
consuming interlocutory appeals. Because "almost 30 percent of
all the hearing examiners in federal service (161 out of 578) may
retire from service during the next three years as a result of
mandatory or optional retirement," ^' agencies will have a signifi-
cant opportunity to strengthen the quality of the hearing exam-
iner corps. In these circumstances, an agency that has the author-
ity to adopt discretionary review procedures may conclude that
such procedures are at least as likely to free the time of agency
members as would an intermediate appellate review system.

Still other agencies whose workloads might seem to suggest the

^ Committee on Internal Organization and Procedure, Delegation of Final Decisional
Authority, in Selected Reports of the Administrative Conference of the United States, S. Doc.
No. 24, 88th Cong., 1st Sess. 157, 158-59 (1963).

^^See Phillips Petroleum Co., 24 F.P.C. 537, 546 (1960), aff'd, 303 F.2d 380 (D.C. Cir. 1961),
affirmed sub nom. Wisconsin v. FPC, 373 U.S. 294 (1963).

M Reorganization Plan No. 3 of 1961, 75 Stat. 837 (1961), 49 U.S.C. § 1324 (1964) ; CAB
Delegation of Function to Hearing Examiners, 14 G.F.R. § 301.47 (1963).

"'See Reorganization Plan No. 4 of 1961, 75 Stat. 837 (1961), 15 U.S.C. § 41 (1964) [Federal
Trade Commission] ; Reorganization Plan No. 7 of 1961, 75 Stat. 840, 46 U.S.C. § 1111 (1964)
[Federal Maritime Commission] ; cf. E. Gellhorn, The Treatment of Confidential Information by
the Federal Trade Commission, 36 U. Chi. L. Rev. 113, 181-83 (1968).

"* See Auerbach, Scope of Authority of Federal Administrative Agencies to Delegate Decision
Making to Hearing Examiners, 48 Minn. L. Rev. 823, 853-69 (1964).

®' Miller, The Vice of Selective Certification in the Appointment of Hearing Examiners, 20 Ad.
L. Rev. 477, 485 (1968).

REC. 6. DELEGATION OF DECISION MAKING 153

desirability of Review Board procedures may regard the adjudica-
tory burden as a necessary or useful one to bear in order to secure
advantages that might be compromised under a Review Board
system. This may be particularly true of agencies concerned with
prompt disposition of certain classes of cases. Chairman McCuUoch
of the National Labor Relations Board expressed concern to
a congressional subcommittee in 1967 that mandatory imposition
of a Review Board, by adding a level of internal review, "would
unduly burden and delay the handling of election cases and nullify
the Congressional intention to expedite the processing of such
cases." ^^^

A similar conclusion could be reached by agencies whose mem-
bers believe that constant exposure to actual records and the shift-
ing factual patterns that litigation reveals, although it may be
time-consuming and repetitive, serves an educational function. A
succession of mine-run cases may hold hints of the emergence of
new problems the significance of which the agency's staff may
not be as likely to recognize. The members of the agency may
therefore regard such exposure as essential to the proper per-
formance of their policy-making duties.

One might argue with many of these agency estimates. Some
may understate the need for a Review Board; others may over-
state the advantages of present arrangements. Agencies are as
prone as other institutions to make the error, in de Tocqueville's
precise phrase, of confusing the familiar with the necessary.
Even if the estimates are arguable, however, their variety demon-
strates that mandatory imposition of Review Board procedures on
every agency would be an indiscriminate reform. "[N]o formula
of reform can be applied across the board to all agencies," ^^ and it
would be a serious mistake to enact legislation that seeks to require
the creation of Review Boards wholesale, as it were, rather than
retail. Legislation that lacks the support and sympathy of agencies,
particularly if it seeks to control internal procedures, is not likely
to succeed in any event.

This does not mean that it would be inappropriate for Congress
to enact enabling legislation authorizing federal administrative
agencies to exercise their discretion to create Review Boards. To
the contrary, such legislation would place the power of decision
where it belongs. By allowing agencies to consider the establish-
ment of Review Boards without the necessity of having to persuade

°' Comments of Chairman Frank W. McCulloch, in Hearings on S. 518 Before the Subcomm. on
Administrative Practice and Procedure of the Senate Comm. on the Judiciary, 90th Cong., Ist
Sess. 223 (1967).

»» Bernstein, Book Review, 81 Harv. L. Rev. 1886. 1887 (1968).

154 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES

Congress to grant the statutory authority to do so — indeed, by

mooting the question whether statutory authority is necessary

such legislation might stimulate experimentation with appellate
review procedures.

By enacting enabling legislation only, Congress runs the risk
that it will not be implemented; the risk will extend to agencies
where the desirability of Review Board procedures may seem the
most clear. But the risk of inertia or bad judgment by some
agencies seems preferable to the serious possibility that unwork-
able, uncongenial procedures will be fastened on agencies that
perhaps do not need or want them. It is wholly proper, if Congress
believes it desirable, to require agencies to report from time to
time whether they have elected to create a Review Board, and the
reasons for their decisions.^oo In any event, the risk of non-imple-
mentation is one that Congress can eliminate by enacting individ-
ualized legislation for any agency about which it is specifically
concerned.

In framing enabling legislation. Congress should take care to
preserve wide opportunity for agency choice of structure, juris-
diction, and authority of Review Boards. It would be shortsighted
to prescribe detailed procedures and requirements for Review
Boards on the assumption that agencies that establish Review
Boards will reflect different estimates of different needs in diffent
agencies. Enabling legislation will be useful in the degree that it
allows individual agencies the latitude to establish Review Boards
that can truly be responsive to their distinctive needs,

See Committee on Internal Organization and Procedure, Delegation of Final Decisional
Authority, in Selected Reports of the Administrative Conference of the United States. S. Doc
No. 24, 88th Cong., 1st Sess. 157, 163 (1963).

REPORT IN SUPPORT OF DISCRETIONARY REVIEW OF
DECISIONS OF PRESIDING OFFICERS; SUBPARA-
GRAPH 1(b) OF RECOMMENDATION NO. 6

Prepared by
Emory N. Ellis, Jr.
Executive Secretary

I. Origin of Review

At the meeting of the Council of the Administrative Confer-
ence on November 11, 1968, the Committee on Agency Organiza-
tion and Procedure proposed that the Conference consider amend-
ing Section 8 of the Administrative Procedure Act (5 U.S.C. 557)
so as to give the administrative agencies the authority to establish
intermediate appellate boards to review formal proceedings. The
proposal was supported by a lengthy written report of Professor
James O. Freedman of the University of Pennsylvania Law School
and the consultant to the Committee. Professor Freedman's paper
was basically a study of the appeals board procedure at the Federal
Communications Commission. While he noted that such a proce-
dure was used in at least one other agency (the ICC) and while
he referred to the type of discretionary review procedure in effect
at the CAB, he did not analyze any but the FCC's experience.

The Council considered the recommendation at its November
11, 1968, meeting. The Council adopted the position that the pro-
posal should recommend not only the use of appeal boards, where
appropriate, but should give the agencies the alternative of select-
ing the discretionary review procedure. The latter procedure had
been recommended by the 1961-62 Conference, but had not been
implemented.

The Council's amendment was accepted by the Committee, and
the proposal, as amended, was submitted to the Assembly at the
plenary session in December 1968. The issue prompted consider-
able discussion at the meeting. Finally, the Committee's proposal,
as amended, was adopted as a recommendation of the permanent
Conference. However, the Committee on Agency Organization
and Procedure was requested to make a study of the discretionary
review procedure as used at the CAB and to report the results
to the Conference.

155

156 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES

II. History and Application of CAB Rule

Reorganization Plan No. 3 of 1961 ' authorized the Civil Aero-
nautics Board "to delegate [subject to the strictures of the Ad-
ministrative Procedure Act] any of its functions to a division of '
the Board, an individual Board member, a hearing examiner, or
an employee or employee board . . ." The CAB could have chosen
to set up an intermediate appeals board under this authority. It
chose instead to adopt a discretionary review procedure similar
to the certiorari procedure applicable in the Supreme Court of the
United States.

This procedure was first proposed by Notice of Proposed Rule-
making PDR-8, September 12, 1961 =^ and was finally adopted
with relatively minor amendments by procedural rule issuance
PR-59 of January 23, 1962.^

Prior to adoption of the rule, the Board reviewed virtually all
examiner's initial decision. Exceptions, if any, to the initial deci-
sion were required to be filed 10 days after service thereof, * and
the case would be reviewed as a matter of course.'^ The review in
almost all instances involved all issues and all of the evidence
which was before the examiner. While the rules provided that no
objection could later be made in brief or oral argument with re-
spect to an ultimate conclusion which was not expressly made the
subject of an exception, it was a poor attorney indeed who could
not couch his exceptions in broad enough terms to permit his full
articipation in the matters before the Board."

Except in the most insignificant cases, the Board review would
involve the filing of briefs to the Board within a time specified,
and an oral argument before the Board.

PR-59 was intended to remedy this situation. Its essential parts
were :

(1) a delegation of authority, to the hearing examiner as-

' 5 U.S.C. App.

^ 26 F.R. 8642

3 The rule, as originally proposed included a discretionary review procedure for air safety
proceedings, which were then under the CAB's jurisdiction, as well as for economic proceedings.
PR-58, January 23, 1962, made final the rules for air safety proceedings. The air safety functions
of the CAB were transferred to the National Transportation Safety Board by the Transportation
Act of 1966 49 U.S.C. §1654. We note that the NTSB does not now employ the same type
procedure that applied to air safety proceedings at the CAB (see 14 CFR §421.41-421.47).

* While the rules contained provisions for the form and content of exceptions specifying that
they should not be lengthy or repetitive, and should relate only to ultimate conclusions, it was
the practice of the CAB practitioners at the time to file a pre-brief in the guise of exceptions.

^ Even in cases where no exceptions were filed and the Board agreed with the Examiner as to
the merits, the Board would issue an opinion and order making the findings and drawing the
conclusions necessary to support the decision.

* The Board still uses the exception procedure in cases involving international matters subject
to approval of the President under Section 801 of the Federal Aviation Act of 1958 49 U.S.C.
§ 1461. See Rule 30 of the Board's Rules of Practice for this procedure (14 CFR § 302.30)

REC. (5. DELEGATION OF DECISION MAKING 157

signed to a particular case, of the Board's function of making
the agency decision on the substantive and procedural issues
remaining for disposition at the close of the hearing; '

(2) a provision that review of initial decisions is not a
matter or right but of sound discretion of the Board ; '^ and

(3) a provision specifying the grounds on which petitions
for review may be filed.''

In short, the new procedure was intended to give the Board
the flexibility to lighten its case load and expedite its proceedings
by allowing an examiner's decision to become the final decision
of the Board without further proceedings where it is well reasoned
and based on the evidence of record or not controversial, and where
review is warranted, by limiting issues on review to those which
are really important and controversial.

The process is a simple one. A party who desires review is re-
quired to file a petition for discretionary review within 25 days
after service of the initial decision in the case. The petition must
allege one or more of the grounds for review specified in Rule 28
(a) (2).^" Rule 28 calls for a clear concise statement of issues for
review and for citations to the record in support of issues. ^^

Answers to petitions for review may be filed within 15 days
after service of the petition.

Exercise of the discretion to review requires the votes of 2 or
more of the 5 Board members. In cases of great importance, the
Board occasionally grants review even before petitions are filed. ^-
However, the normal course is to await petitions and answers.

Board action on the petitions for review is triggered by a memo-
randum from the General Counsel to the Board summarizing the
petitions for review and answers,^' and recommending a course of

1 ' 14 CFR § 302.27. This section also provides that the examiners's initial decision shall become
I effective as the final decision of the Board within 30 days after service if within that time no
petitions for Board review have been filed, or the Board has not ordered review sua sponte.
«14 CFR § 302.28(a) (1)
•14 CFR § 302.28(a) (2) States that:

"(2) Petitions for discretionary review shall be filed only upon one or more of the
following: grounds:

"(J) A finding of a material fact is erroneous;

"(ii) A necessary legal conclusion is without governing precedent or is a departure
from or contrary to law. Board rules, or precedent;

"(iii) A substantial and important question of law, policy or discretion is involved;
or

"(iv) A prejudicial procedural error has occurred."
*• Petitions for review may not exceed 20 pages.

i> As was the case with exceptions, the Board does not enforce this requirement, and petitions
for review have become pre-briefs.

" In these cases, the exception procedure outlined above is usually invoked by the order taking
review.

" All Board members and their assistants receive copies of the petition and answers when they
are filed.

158 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES

action. Ordinarily the course recommended falls into one of the
following categories: (1) decline review and specify the date on
^ ^'^ the examiner's decision is to become the decision of the
ifoard; (2) accept review on all issues raised by petitions- (3)
accept review as to some issues and decline review as to others
In cases where review is recommended on some or all issues'
the memorandum also includes a recommendation as to whether
further procedural steps are required. In the great majority of
cases, briefs to the Board and oral argument are ordered But
occasionally the Board finds that the nature of the examiner's
decision the status of the record, and the petitions for review are
such that no further procedural steps are required.

The General Counsel's memorandum dealing with petitions for
review IS ordinarily acted upon by notation rather than calen-
dared for discussion-that is, the recommendation is circulated to
the Board members in their offices with an action target date
stamped on it. The Member notes on the item whether he approves
disapproves (with or without comment or amendments), or de-
sires to have the item calendared for discussion. As stated above
only two votes are required for review.

Several days prior to the oral argument in a case in which
review has been granted, the Office of the General Counsel submits
a memorandum to the Board members summarizing the briefs of
the parties to the Board.-' The memorandum contains no recom-
mendations and in most cases is distributed directly to the
Board members by the cognizant division of the Office of the
General Counsel without the personal clearance of the General
Counsel or his Deputy.

After the oral argument, the Board deliberates and discusses
the case m executive session; and, when decision has been reached,
it instructs the appropriate opinion writers so that they may com-
mence work on the opinion.^^ Internal target guidelines for com-
pletion of the work are adopted, but these are not rigidly
enforced.

When the opinion is completed to the General Counsel's satis-
faction, study copies are circulated to the Board members Each
member re views the document, and, if he approves, he calls for

whl^r*'"? *r ,':^'=°"«'d«'-^tion of a Board order declining review will be entertained only

rilmnn f ° ' r" .'" ''^'■' ^""^ '^''^' '""^'""' '" P^^*' ^^^ '^'^ the rules require that the

petition for reconsideration be limited to the single question of whether any issue designated

Lde^endTnt;;." '"^^^^^^^'^ interrelated to an issue not designated that it cannot be review^
Je'^eceM^ ^''^' °^ *'°""^' """""^^^^ ^ ^^^ ^"^'•'J Members and their assistants when they

of't?rrn'"'?"r""''r' ^'::,^"°'-"«y ^<J^'«°'-« ^'"PJoyed Principally in two operating divisions
of the General Counsel s OfRce-the Routes Division and the Rules and Rates Division.

REC. 6. DELEGATION OF DECISION MAKING 159

the original opinion and order and affixes his signature and the
date thereto. The opinion and order are released when the last
member has signed.'"

Approximately eight years have now elapsed since adoption of
the discretionary review procedure by the CAB. The Board, its
staff and its hearing examiners seem overwhelmingly to approve
of the procedure. However, no attempt has been made, until now,
to analyze the results in statistical form. Such an attempt follows.

III. EFFECTIVENESS OF THE DISCRETIONARY REVIEW PROCEDURES

AT THE CAB

A. Background Material

To obtain basic source material for this study, the Chairman
of the Administrative Conference requested that the CAB compile
and submit to the Conference, for comparison purposes, certain
information related to time lapse between initial decision and
final Board decision for cases during a representative period
immediately preceding the effective date of the discretionary re-
view procedure, and for all cases subject to the procedure decided
after the effective date. In answering the request it was necessary
for the CAB to sift through and submit information for 348 cases.

The Board submitted the information requested for 145 cases ^^
subject to the old exception procedure in which the initial decision
was issued subsequent to July 1, 1958,'" and for 203 cases to which
the discretionary review procedure applied.

For the cases using the old procedure the Board indicated by
case, the date of the initial decision, the date of the Board order
and opinion in which case was decided, the date of any order on
petitions for reconsideration, a judgment as to the date on which
the case was substantially decided, and the number of days elapsed
between initial decision and final Board decision.

The date for cases conducted under the discretionary review
procedures included all of the same information, and, in addition,
the date of the Board's order dealing with petitions for review,
whether review was declined or granted, whether the issues on
review were substantially the same or significantly more limited

" Procedures for petition for reconsideration are then available to the parties. 14 CFR
§ 302.37.

" The cases used were only those to which the discretionary review procedure would have
been applicable if it had been in effect during the period. Therefore, cases involving decisions
which were subject to approval of the President were excluded.

" Although the new procedure became effective on February 1, 1962, it was made inapplicable
to proceedings in which the hearing had actually commenced on or before that effective date.
Therefore, some of the cases included in those decided under the old procedures were actually
decided well after the new procedures had become effective.

160 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES

than those pending before the examiner, and whether further pro-
cedural steps were ordered.

On the basis of this information, it is possible to construct a
fairly reliable statistical picture of the success of the review pro-
cedure in expediting cases, by comparing the data before and
after adoption of the rule.

Caution is urged, however. While substantial time saving is
indicated, all of it cannot be attributed to the advent of the dis-
cretionary review procedure. The Board has taken several other
steps in the direction of expediting formal proceedings since 1962.
Among the most notable of these was the adoption of Subparts
M & N of its Rules of Practice in Economic Proceedings.^" There
has also been a general impetus since the middle 1960's to stream-
line hearings and to speed up the decision of cases. It is difficult,
if not impossible, to say what portion of the time savings realized
are the direct result of the review procedure rather than the gen-
eral program. However, it is the consensus at the Board that the
review procedure has played a major role in the salutary results,
and that it is entitled to a substantial part of the credit.

B. The Results — Expedition

The data submitted by the Board indicates that the cases tried
under the old system took an average of 213 days between initial
decision and final Board decision. ^^ Under the discretionary review
procedures, the Board reviewed 97 of 203 cases, or 48 percent.
The average case required 163 days between initial decision and
final decision." This amounts to an average saving of 50 days per
case, a significant improvement. But an even better indicator of
the value of the rule can be found in the following table :

TABLE A

Before rule After rule

Cases taking : Percent of Percent of

Number total Number total

^ (145 cases) (203 cases)

100 days or less 40 27.58 108 53.20

6 months or less 71 48.96 130 64.03

1 year or less 124 85.51 179 88.17

18 months or less 135 93.10 197 97.04

20 14 C.F.R. § 302.1301-§ 302.1415. These Rules establish priorities for hearing in certain types
of cases and very expedited procedures under which they are heard.

^* Undoubtedly there are atypical cases included in both categories. No attempt has been made
to extract these cases on the theory that the results are available for sufficiently representative
periods under each category to make the effect of inclusion of these cases on the ultimate
comparison negligible.

^^ Cases in which review was granted, either in full or in part, averaged 281 days per case,
while those in which review was denied averaged only 56 days per case.

REC. 6. DELEGATION OF DECISION MAKING

161

After the rule the Board has been able to complete over half of
the cases to which the Rule applies in 100 days or less and almost
two-thirds in six months or less. Before the Rule only 28% of the
same type of cases were concluded in 100 days and only 49% were
concluded within six months.

If we compare the days per case expended under the review
rule by calendar year -^ with the overall average time expended of
213 days for those cases to which the old procedures were appli-
cable,'-' we can see that the significant time savings per case were
not confined to the early period of the review rule's applicability,
but have occurred in all except two of the years of the rule's
existence.-'^

TABLE B

Year

After rule
no. of cases

After rule
average days/case
by calendar year

Savings

1962 (6 mos.)

1963

1964

1965

1966

1967

1968

1969 (9 mos.)

165

115

195

157

168

154

108

105

257

The following table breaks down time savings by the major
classes of cases handled by the CAB.

TABLE C

Percent of
Type of case Saving in Total cases cases where

days/case after rule review

declined

Rate 149 18 61.11

Enforcement 74 14 64.28

Cert, and Licensing 34 136 47.79

Control and merger* 22 26 61.53

♦Acquisition of control and merger cases are not good comparative indicators of time savings
because they have always received very expedited treatment by the Board, and, therefore, show
the least improvement in elapsed time.

'' For this purpose cases have been placed in calendar years by their date of final decision.
" 1962 and 1969 should be excluded since the results reported included only 7 and 14 cases
respectively for only a portion of each year.
" See Section IV-A infra, for discussion of FCC experience.

162 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES

The reasons for the time savings under the new procedure are
reasonably apparent from an analysis of the CAB statistics. In
cases where the Board has declined review altogether, the average
time lapse between initial decision and final decision has been
56 days per case. This can be compared to the average of 281 days
per case which has been the experience where review has been
granted. The 56 day figure is even more impressive in light of the
fact that under the old procedure ten days would have been allowed
for exceptions, at least 30 days for briefs to the Board, and
probably 10 to 15 more days before oral argument would be heard,
depending on the shape of the Board's calendar. Added to this
would be the time required even in simple cases to set up a
Board meeting convenient to all Members at which the case
could be discussed and instructions given.

Where the Board has chosen to limit the issues on review there
also appear to be significant time savings. There were 97 cases
listed by the Board in which review was granted ; the issues were
limited substantially in 35 of them. These cases took on the aver-
age 82 days less between initial decision and final Board decision
than the 62 cases in which the issues reviewed were essentially
the same as those before the examiner. Along the same lines, the
20 cases in which no additional procedural steps were ordered
took 206 days less than the 77 in which briefs to the Board and
oral argument were ordered. It should be pointed out that the
cases in which full review is granted and all procedural steps are
ordered included the most difficult and important ones which nor-
mally take longer to decide than the simpler cases. 2*^ This detracts
from the value of the results of the statistical exercise performed
above. However, the fact that a procedure is available to make it
unnecessary to use a cannon to kill flies is a very significant bene-
fit in and of itself.

A disturbing element in the process is that for the cases on
which review is granted an average of 93 days per case elapse
between initial decision and the order granting review. This rep-
resents approximately 33% of the average time required between
initial decision and final Board decision. Ways of reducing this
time should be explored. One possiblility would be, in appropriate
cases, oral presentation by the General Counsel to the Board of the
matters raised on petitions for review.

In summary, it would appear that substantial time savings

^' Some analysis was performed to determine whether the devices permitting limiting of issues
and procedural steps are being used to better advantage as time goes by and experience is
deepened. It appears that this has not been the case. And the yearly use of these two devices
does not show a trend to either more or less use of them.

REC. 6. DELEGATION OF DECISION MAKING 163

have resulted from the use of the discretionary review procedure,
to the advantage of the litigants, the Board and the public. The
litigants and the public benefit to the extent that it is relieved of
the burden of focusing on certain issues, and, when it does decide
to review a case, the focus is sharper. It is safe to say from the
foregoing statistical analysis that the CAB rule has been an effec-
tive tool for the CAB, one which could have similar value to some
other agencies.

IV. Comparison of Advantages of FCC Review Board
Procedure with CAB Discretionary Review Procedures

A. Introduction

At the outset, it is to be realized that any comparison of CAB
discretionary review procedures and the FCC Review Board
must take into account the legislative history of the establishment
of the latter Board. In contrast to the action permitting the CAB
Reorganization Plan No. 3 to go into effect (see note 1, supra),
the Congress rejected the President's Reorganization Plan No. 2
for the FCC, after lengthy hearings,-' despite its similarity to the
Plans submitted for other regulatory agencies (FTC, CAB,
SEC).

Instead, the Congress by statute effected precise reorganizations
of FCC's structure and procedures by amendments of the Com-
munications Act of 1934, as amended.-^ The pertinent amendment
regarding delegation of review functions in adjudicatory cases,
the continuing obligations of the Commission members to re-
view such delegated actions, and the composition and qualifica-
tions of what later came to be named as the Review Board were
specifically laid out in the Act's amendments. ^^

Moreover, the hearings and the Committee's Reports indicated
the "built-in" procedural "safeguards" upon which the Congress
insisted, insofar as continued participation by Commissioners in
the decisional process was concerned, as well as the initial limita-
tions upon the Board's jurisdiction. These matters are treated at
length in the Freedman Report. Further, it is clear from this legis-
lative history that a principal, if not the main purpose of the
statutory authorization for a review board was not so much a
procedural device to avoid delays, as it was to permit the Com-
missioners to devote a greater amount of their time to the consid-

^' See Hearings Before the Committee on Government Operations, U.S. Senate, 87th Congress,
S. Res. 142 (Plan No. 2), June 6 and 7, 1961.
='Pub. L. 87-192, Aug. 31, 1961, 75 Stat. 420.
"See Section 5(d). as amended— 47 U.S.C. 155.

164 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES

eration of fundamental policy matters arising out of the rapidly
expanding technology and growth of the communications industry.

Finally, though there is no attempt in this report to analyze
the diifering statutory staff structures provided for by the Com-
munications Act and the CAB statute, i.e., separation of functions
provisions, the provision for a specific opinion vv^riting staff at
the FCC Commissioners' level, the role and jurisdiction of the
General Counsel in both agencies, it is to be noted that the com-
parisons which follow must be considered, inter alia, in this light.
Likewise, in any such comparison, consideration should be given
not only to total workloads, but also the nature and variety of
cases which come before the agency. For example, the FCC is one
of the few regulatory agencies whose activities are possibly more
subject to rapid and radical technological change than in almost
any other area. Equally important is the fact that, unlike other
regulatory agencies which are responsible for one industry or area
of commerce, the FCC has a unique multifaceted responsibility for
managing and regulating three basic industry and user groups —
broadcast, common carrier and safety and special radio services.
Because of the world-wide nature of communications, it must also
function on an international basis.

With the foregoing as background, the following analysis will
attempt a comparison in those areas of commonality which may
obtain in the use of adjudicatory review techniques.

B. Expedition

As demonstrated above it would appear that the CAB's review
procedure results in significant time savings. These savings seem
to have been spread out over the entire existence of the rule
rather than restricted to any particular period.

Professor Freedman has made an analysis similar to that made
above, to show time savings resulting from the FCC use of an
intermediate review Board.'"' He shows quite a large saving of 89
days per case during the first 29 months of the Review Board's
existence, but much less impressive figures during the last three
years of his analysis." In fiscal 1965 the savings decreased to 33.5
days per case. In fiscal 1966 there was an increase of 5.5
days per case. And in 1967 the time saving was 17.5 days per
case.

Mr. Freedman explains the fluctuation in the average time
requirements in recent years by citing increases in the Review

30 Freedman Study, pp. 14 and 15.

REC. (!. DELEGATION OF DECISION MAKING 165

Board's jurisdiction and the need to increase the size of its staff.
The resources used by the Review Board will be the subject of a
discussion later herein.

C. Time Savings to Aqevcy Members

Both procedures undoubtedly save the members of the respec-
tive agencies significant amounts of time that they would other-
wise spend in consideration of formal proceedings. This is an
extremely important factor in a climate of increasing activity at
both agencies.

As Professor Freedman's study shows the FCC granted peti-
tions for review of Review Board decisions in only 23 of 175 ap-
peals or 13 % of the cases.

The results of the CAB's review procedure are not this impres-
sive. The Board reviewed in whole or in part 97 of 203, or 48%, of
the Examiner's initial decisions during the period for which re-
ports were submitted. The ability to limit the issues on review
and to control further procedural steps undoubtedly resulted in
some savings as well. But it appears that the FCC has found the
better method to limit its members' participation.

Some of the credit for this result probably should go to the
FCC member's ability to control the natural inclination to par-
ticipate personally in decisions on the merits. This inclination
must be controlled if either the FCC or CAB procedures are to be
successful, and the faith that the FCC has in the five well-qualified
members of its Review Board undoubtedly has contributed to the
better results it has experienced in this regard. Nevertheless, the
CAB shows a steady trend downward in the annual percentage of
initial decisions reviewed, and it is hoped that the trend will con-
tinue in the future.

Moreover, it should be noted that in the 52% of the cases in
which review is declined by the CAB, the case is ended quite soon
after petitions for review and answers have been filed, after a
minimum amount of involvement of staff. Board and party time.
Therefore, at the CAB all share in the time savings.

'* Professor Freedman also includes time savings for interlocutory matters at the FCC. As a
general rule, after an examiner is assigned to a case at the CAB, he passes on all interlocutory
matters (14 CFR § 302.18(a) and § 302.18(e)) and the CAB itself considers only those
interlocutory matters dealing with significant changes in the scope of the proceeding. These are
ordinarily terminated as of the time of the pre-hearing conference. Most other interlocutory
matters are handled by the examiner under delegated authority, and may be appealed to the
Board only with the consent of the examiner. (14 CFR § 302.18(e)). The examiners have been
loath to permit interlocutory appeals.

166 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES

D. Quality of Decisions

Professor Freedman makes the point that the Review Board
procedure has resulted in more impartial, better conceived deci-
sions, and better drawn opinions. He observes that Review Board
members spend more time reading briefs and reviewing the record
than Commission members and that they follow policy made by the
Commission instead of making it. Therefore, they are better
equipped to use the facts of a given case under policy established
by the Commission to arrive at a fair and impartial decision. He
contends that the Review Board's isolation from policy making
functions is a protection against improper influence by outsiders,
and against "hunch" decision making.

These arguments would seem to apply as well to the CAB's
discretionary review procedures. In the first place, at the FCC
and the CAB, the ultimate power to decide the case rests with the
members of the agency. If the members want to decide a case on
the merits themselves, for any reason whatsoever, they have the
power to do so, Review Board and discretionary review procedures
notwithstanding.

Secondly, if delegation of decision making authority to a five
man Review Board is a solution to these problems mentioned by
Professor Freedman, it would seem that delegation to a qualified
impartial hearing examiner would serve the same purpose. The
hearing examiner does not make policy, he follows it. He is the
decision maker in the chain most familiar with the record and the
contentions of the parties and he is isolated from improper
influences to the same extent that Review Board members are.
Therefore, following Professor Freedman's line of reasoning,
the hearing examiner is in an excellent position to assume the
responsibility of deciding any case he has heard.

It is not disputed that the Review Board members at the FCC
are eminently qualified for their positions,^- and that they
have done their jobs well and to the obvious satisfaction of the
Commission.

By the same token, the consensus among CAB practitioners and
at the CAB among the Board Members, the staff and the hearing
examiners is that the responsibility vested in the hearing ex-
aminer under the discretionary review procedure, has improved
the quality of the examiner's work product, has improved the

^ The 1961 Amendment to the Communications Act (Sec. 5(d)) set up the necessary
qualifications for appointments of members of the Review Board in terms not unlike those for
Hearing Examiners under the APA. The members nominated to the Board were approved by
the Civil Service Commission, as was the grade classification for such positions (GS-17).

REC. 6. DELEGATION OP DECISION MAKING 167

prestige of Bureau of Hearing Examiners, and has enabled the
Board to dispose of many cases without review.

E. Elimination of a Procedural Step

One of the principal advantages of the CAB's review procedure
is that, in a number of cases, it permits the elimination of a pro-
cedural step — that is, Board review on the merits. The FCC Re-
view Board procedure eliminated that step also, but substitutes
therefor Review Board consideration. Thus, even in cases where
an examiner's decision may be well reasoned, supported by the
evidence of record, and free from legal or factual error, the
parties are granted Review Board review as a matter of right."

Thus a major advantage of the CAB procedure is that it
accomplishes its results without the necessity of setting up a sep-
arate operating entity within the agency and allocating substan-
tial funds to staff it.""* On the other hand, the FCC was required
to commit substantial resources to the establishment of its Re-
view Board.

The Board itself is composed of five members, each of whom
hold a GS-17 rank. The back-up professional staff consists of
three GS-15's, one GS-14, and eleven attorneys in grades from
GS-1 1 to GS-13. Eight clerical employees complete the staff. This
amounts to an expenditure of something in the neighborhood of
one half a million dollars in salaries alone. Of course all of this
cannot be assessed as additional costs relating to the establish-
ment of the Review Board. Even if the Review Board did not
exist a number of the poeple employed by it would be used to
perform similar tasks, such as opinion writing, within the agency.
Nevertheless, the commitment of this number of people to Review
Board activities alone is a sizeable undertaking which could make
small agencies or agencies which have fewer hearing cases than
the FCC reluctant to set up a Review Board.

V. Conclusion

Basically this paper reports on the results and advantages of
the CAB's discretionary review procedure. No additional study

" But see the discussion in the Introduction to Section IV, supra, regarding the statutory
imposition for mandatory review in FCC cases.

'■• This is not to say that the discretionary review procedure does not cost the CAB money.
Members of the General Counsel's staff must be assigned to such tasks as analyzing Petitions for
Review and preparing the memorandums to the Board recommending action of these petitions.
However, these activities fit in well with the other functions of these attorneys, such as writing
opinions, and dealing with informal matters, and they are not significantly different or more
time consuming than tasks performed by the attorney advisors in the General Counsel's Office
under the old review procedures.

168 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES

was made of the FCC's Review Board and there was no intention
to disparage that process. The FCC believes that it has been a
successful program for that agency and there is no reason to
quarrel with its position.

On the other hand the matters discussed above certainly show
that the CAB procedure compares very favorably with the FCC's
for the number and types of cases handled by the CAB. By use of
discretionary review the Board has been able to expedite formal
cases, save Board members' time, improve the quality of its
hearing examiners and their decisions, and eliminate an unneces-
sary procedural step in some instances. It has accomplished this
without the expenditure of substantial funds.

The discretionary review procedure used at the Civil Aeronau-
tics Board is well worth serious consideration by other administra-
tive agencies.

RECOMMENDATION NO. 7

ELIMINATION OF JURISDICTIONAL AMOUNT REQUIRE-
MENT IN JUDICIAL REVIEW

RECOMMENDATION

Title 28 of the United States Code should be amended to elimi-
nate any requirement of a minimum jurisdictional amount before
U.S. district courts may exercise original jurisdiction over any
action in which the plaintiff alleges that he has been injured or
threatened with injury by an officer or employee of the United
States or any agency thereof, acting under color of Federal law.
This amendment is not to affect other limitations on the availabil-
ity or scope of judicial review of Federal administrative action.

169

REPORT OF THE COMMITTEE ON JUDICIAL REVIEW
IN SUPPORT OF RECOMMENDATION NO. 7

Prepared by

Roger C. Cramton

Professor of Law

University of Michigan

An anomaly in the law relating to federal-court jurisdiction
deprives a United States district court, otherwise competent, to
entertain certain cases involving "nonstatutory" review of fed-
eral administrative action in the absence of the jurisdictional-
amount requirement of 28 U.S.C. § 1331 (1964) (the general
"federal question" provision). These cases "arise under" the fed-
eral Constitution or federal statutes and — unless barred by the
doctrine of sovereign immunity and subject to the various limit-
ing rules of standing, exhaustion of remedies, finality, ripeness,
and so on — they are appropriate matters for the exercise of fed-
eral judicial power. The purpose of this recommendation, as it
plainly states, is to correct this anomaly by conferring original
jurisdiction on district courts of "any action in which the plaintiff
alleges that he has been injured or threatened with injury by an
officer or employee of the United States or any agency thereof,
acting under color of federal law,"

Nonstatutory review of federal administrative action has re-
cently been summarized by Professor Byse :

The litigant who seeks judicial review of a federal administrative de-
termination must, of course, bring his action in a court which Congress
has authorized to hear the controversy. If the petitioner can show that
he is "aggrieved" or "adversely affected" by an "order" of one of the
major regulatory agencies, the jurisdictional hurdle will easily be sur-
mounted, for most regulatory statutes specifically authorize such persons
to secure judical review in a named court or courts. If the statute from
which the agency derives its powers does not contain a specific review
provision, the necessary congressional authorization may appear in an-
other statute, such as the Review Act of 1950 [5 U.S.C. § 1031-42
(1964)], or, possibly, section 10 of the Administrative Procedure Act [5
U.S.C. §§701-06 (Supp. II, 1967)]. Whether an action for review is
brought pursuant to a specific or general statutory review provision, the
theory is the same: Congress has directed the judiciary to review the ad-

170

REC. 7. JURISDICTIONAL AMOUNT 171

ministrative determination ; so long as the statute does not transgress
constitutional limitation, it is the court's duty to comply with the con-
gressional directive.

If the litigant is unable to ground his action on either a specific or a
general statutory review provision, judicial relief is not necessarily fore-
closed, for he may still be able to institute a "nonstatutory" review
action. . . .

The litigant who seeks review under this theory will institute an ac-
tion in a federal district court against the individual whose action or in-
action as a government official allegedly invades his legal rights. The
remedy usually sought is an injunction, often accompanied by a request
for relief under the Declaratory Judgment Act [28 U.S.C. §§ 2201-02
(1964)]. More often, the nonstatutory review action is based upon a
jurisdictional provision enacted as part of a substantive statute, such as
section 279 of the Immigration and Nationality Act of 1952, which states
that district courts shall have jurisdiction of "all cases, civil and crimi-
nal, arising under any provision of this title." [8 U.S.C. § 1329 (1964)].
More often, the nonstatutory review action is based upon a
jurisdictional section of title 28 of the United States Code, such as sec-
tion 1331, the general "federal question" jurisdictional grant (which is
subject to the requirement of the $10,000 jurisdictional amount) or sec-
tions 1337 and 1339, which confer "original jurisdiction" without regard
to jurisdictional amount on the district courts of any civil action "arising
under" any act of Congress "regrulating commerce" or "relating to the
postal service."

Byse & Fiocca, Section 1361 of the Mandamus and Venue Act
of 1962 and "NoTistatutory" Judicial Review of Federal Adminis-
trative Action, 81 Harv. L. Rev. 308, 321-23 (1967) [footnotes
omitted] .

Under present law tliere are a significant number of situations
involving "nonstatutory" review in which a plaintiff must ground
his action on the "general federal question" section of the Judicial
Code, 28 U.S.C. § 1331, and must be prepared to establish not
only that the action arises under the Constitution, laws or treaties
of the United States but also that "the matter in controversy
exceeds the sum or value of $10,000, exclusive of interests and
costs." In some of these cases the jurisdictional-amount require-
ment cannot be met because it is impossible to place a mone-
tary value on the right asserted by the plaintiff. How is one to
value an individual's claim that he is entitled to remain free from
military service, to travel abroad, or to remain free from con-
tinuous police surveillance? In other cases the plaintiff's claim
that he is entitled to a federal grant or benefit (e.g., federal em-
ployment, use of public lands) may be assigned a monetary value,
but the amount in controversy may be $10,000 or less. Judicial
review of these and similar claims may be unavailable or limited
in scope for other reasons, but judicial consideration of the plain-

172 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES

tiff's claim should not be foreclosed solely because of lack of juris-
dictional amount.

The problem is illustrated by the recent case of Boyd v. Clark,
287 F. Supp. 561 (S.D.N. J., 1968), in which four Selective Serv-
ice registrants challenged the constitutionality of college-student
deferments provided by the Military Selective Service Act of 1967,
50 U.S.C. § 456(h) (1) (Supp. 1967), on the ground that student
deferments arbitrarily discriminate against persons who are eco-
nomically unable to attend college. The three-judge district court,
in an opinion by Judge Hays, granted the government's motion to
dismiss for lack of jurisdictional amount :

. . . The injury claimed is an increased likelihood of induction, be-
cause, so the plaintiffs allege, registrants who are deferred as students
thereby ordinarily postpone their induction for several years and in
many cases escape service entirely by acquiring other deferments. . . .

. . . Jurisdiction of this suit is claimed under 28 U.S.C. § 1331, the
general federal question statute, which requires that "the matter in con-
troversy" exceed "the sum or value of $10,000." Plaintiffs' counsel
concedes that he cannot prove that any of the plaintiffs will suffer a
monetary loss of more than $10,000 by reason of the injury alleged.

It is firmly settled law that cases involving rights not capable of valu-
ation in money may not be heard in federal courts where the applicable
jurisdictional statute requires that the matter in controversy exceed a
certain number of dollars. The rule was laid down in Barry v. Mercein,
46 U.S. (5 How.) 103 (1847), a child custody case. The "right to the cus-
tody, care, and society" of a child, the court noted, "is evidently utterly
incapable of being reduced to any pecuniary standard of value, at it rises
superior to money considerations." 46 U.S. at 120. Since the statute per-
mitted appeals only in those cases where the "matter in dispute exceeds
the sum or value of two thousand dollars," the court concluded that it
was without jurisdiction: "The words of the act of Congress are plain
and unambiguous. . . . There are no words in the law, which by any just
interpretation can be held to . . . authorize us to take cognizance of
cases to which no test of money value can be applied." 46 U.S. at 120.
Subsequent decisions have followed this reasoning. See Kurtz v. Moffitt,
115 U.S. 487, 498 (1885) ; Youngstown Bank v. Hughes, 106 U.S. 523
(1882) ; Giancana v. Johnson, 335 F.2d 366 (7th Cir. 1964), cert, denied,
379 U.S. 1001 (1965) ; Carroll v. Somervell, 116 F.2d 918 (2d Cir. 1941) ;
United States ex rel. Curtiss v. Haviland, 297 Fed. 431 (2d Cir. 1924) ; 1
Moore, Federal Practice § 0.92 [5] (2d ed. 1964).

Judge Edelstein dissented, arguing that the plaintiffs' allegation
that the matter in controversy exceeded $10,000 should not be
scrutinized, at least where the defendant did not move to dismiss
on that ground, or, alternatively, that the court should "assume
that freedom from an unconstitutional discrimination exceeds the
sum or value of $10,000." He suggested that the jurisdictional-
amount requirement was an unconstitutional one in situations,

REC. 7. JURISDICTIONAL AMOUNT 173

such as this, in which the action, because it is against federal
officers, could not be brought in a state court.

The reasons for objecting to the absence of federal jurisdic-
tion in a case like Boyd v. Clark are readily apparent. The factors
relevant to the question of whether or not a federal court should
be available to a litigant seeking protection of a federal right have
little, if any, correlation with minimum jurisdictional amount.
Instead they involve such considerations as whether there is a
need for a specialized federal tribunal and whether there are de-
fects in the state judicial system that might substantially impair
consideraton of the plaintiff's claim. These factors have special
force in the type of cases with which this recommendation is
concerned — where specific relief is sought against a federal officer
— because state courts generally are powerless to restrain or man-
damus the action of a federal officer taken under color of federal
law. See Arnold, The Power of State Courts To Enjoin Federal
Officers, 73 Yale L.J. 1385 (1964). Unlike other federal-question
cases subject to the jurisdictional-amount requirement, such as
cases attacking state statutes on federal constitutional grounds,
denial of a federal forum for lack of jurisdictional amount may
be a denial of any remedy whatsoever. As Judge Edelstein pointed
out in his dissent in Boyd v. Clark, jurisdictional provisions which
deny a litigant any opportunity to present federal constitutional
claims may themselves present constitutional difficulties.

The lack of a state forum in actions against federal officers
serves to distinguish this recommendation from other and more
general proposals to eliminate the jurisdictional-amount require-
ment in federal-question cases. The American Law Institute, for
example, has tentatively recommended that the jurisdictional
amount requirement be abandoned in federal question cases. ALI,
Study of the Division of Jurisdiction Between State and Federal
Courts § 1311 and commentary at 172-76 (1969). Whether or not
these broader proposals are accepted, the narrower problem with
which this recommendation is concerned needs correction.

It is unclear why Congress, when it increased the jurisdictional
amount in diversity-of-citizenship cases in 1958 from $3,000 to
$10,000, also raised the minimum jurisdictional amount in feder-
al question cases arising under 28 U.S.C. § 1331. The legislative
history merely asserts that the effect of the change is insignificant
because the only cases affected are those involving the constitu-
tionality of state statutes and those arising under the Jones Act.
Virtually all other cases were said to fall within one of the special
federal question statutes which require no minimum jurisdictional

174 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES

amount. See, e.g., 104 Cong. Rec. 11508 (June 30, 1958). If this
were the case it is difficult to see why the provision was enacted,
since the only purpose of increasing the jurisdictional amount was
to reduce the workload of the federal courts, a purpose which
would not be advanced if federal-question cases were unaffected.
See Friedenthal, Neiv Limitations on Federal Jurisdiction, 11 Stan.
L. Rev. 213, 216-18 (1959).

The assertion, however, that the significant cases which arise
under section 1331 are limited to the two categories mentioned
is misleading and erroneous. There is an important third cate-
gory, with which this recommendation is concerned, in which
persons aggrieved by federal administrative action are seeking
nonstatutory review in an action brought against the officer. In
these cases the plaintiff must follow one of the following courses :
(1) satisfy the minimum jurisdictional amount required by 28
U.S.C. § 1331; (2) bring his action in the District of Columbia;
(3) cast his action in the form of a mandamus proceeding, thus
qualifying under the provisions of the Mandamus and Venue Act
of 1962, 28 U.S.C. §§1361, 1391(e) (1964); or (4) persuade
the court that section 10 of the Administrative Procedure Act,
5 U.S.C. §§701-04 (Supp. II, 1967), provides an independent
jurisdictional basis for judicial review of federal administrative
action, a proposition that is much in doubt. Brief consideration
will be given to the unsatisfactory nature of each of these alter-
natives.

1. Satisfying the minimum jurisdictional amount. The prin-
ciples for determining whether the amount in controversy satis-
fies statutory requirements are well-established. The plaintiff has
the burden of alleging and proving jurisdictional facts. The
plaintiff's ad damnum is ordinarily taken at face value unless it
appears not to have been made in good faith or the court believes
as a matter of legal certainty that the value of the right in con-
troversy is less than the minimum amount. St. Paul Mercury
Indem. Co. v. Red Cab Co., 303 U.S. 283, 288-89 (1938). There
is no guarantee, however, that the court will not examine in de-
tail the value of the plaintiflF's claim. In Carroll v. Somervell,
116 F.2d 918 (2d Cir. 1941), for example, where a federal em-
ployee sought to enjoin his dismissal for failure to sign a non-
Communist affidavit, the employee alleged loss of standing in the
community in excess of $3,000. Nevertheless, the case was dis-
missed for lack of jurisdictional amount on the ground that the
value of the claim was measured by the maximum compensa-

REC. 7. JURISDICTIONAL AMOUNT 175

tion — less than $3,000 — that the employee would be entitled to
receive during the ensuing year.

As the Carroll case indicates, the methods of valuation in in-
junction suits are conservative. In McNutt v. General Motors
Acceptance Corp., 298 U.S. 178 (1936), it was held that in an
attack on a regulatory statute the amount in controversy is not
the value of the business or other activity regulated but the dif-
ference between its value regulated and unregulated. See also
Healy v. Ratta, 292 U.S. 263 (1934) (the amount in controversy
in tax litigation is measured by the amount of the tax rather
than of the penalty). Although some cases ignore these princi-
ples by treating the plaintiff's ad damnum as conclusive, e.g.,
Flast V. Cohen, 392 U.S. 83 (1968) (federal taxpayer's attack
on federal grants to religious schools) ; Townsend v. Zimmer-
man, 237 F.2d 376 (6th Cir. 1956) (attack on selective service
classification), a plaintiff seeking judicial review of federal ad-
ministrative action cannot rely on this approach being taken.

Although many nonstatutory review actions can be based upon
special jurisdictional provisions such as 28 U.S.C. § 1337 (aris-
ing under acts "regulating commerce"), there is a significant
residue in which jurisdiction must be predicated upon § 1331, the
general federal question provision which requires a jurisdictional
amount in excess of $10,000. Cases against federal officers in
which the jurisdictional-amount requirement was in issue are
listed below.

Reputational or intangible interests that cannot be expressed in money
terms: Oesterreich v. Selective Service System Local Board No. 11, 280
F.Supp. 78 (D. Wyo. 1968), aff'd, 390 F.2d 100 (10th Cir. 1968), cert,
granted, 391 U.S. 912 (freedom from induction resulting from selective
service reclassification) ; Giancana v. Johnson, 335 F.2d 366 (7th Cir.
1964), cert, den., 379 U.S. 1001 ("Courts may not treat as a mere techni-
cality the jurisdictional amount essential to the 'federal question' juris-
diction, even in this case where there is an allegedly unwarranted inva-
sion of plaintiff's privacy [by continuous FBI surveillance]") ; Jackson
v. Kuhn, 254 F.2d 555 (8th Cir. 1958) (constitutionality of military pres-
ence at Little Rock High School; jurisdictional-amount requirement held
not satisfied) ; Vorachek v. United States, 337 F.2d 797 (8th Cir. 1964)
(disclosure of confidential information concerning plaintiff by federal
officers).

Employment interests: Neustein v. Mitchell, 130 F.2d 197 (2d Cir.
1942) (loss of state office because of federal enforcement of Hatch Act
prohibitions on political activity) ; Carroll v. Somervell, 116 F.2d 918 (2d
Cir. 1941) (value of federal employment measured by lost wages) ; Fis-
chler V. McCarthy, 117 F.Supp. 643 (S.D.N.Y. 1954), aff'd on other
grounds, 218 F.2d 164 (2d Cir. 1954) (bare allegation that value of fed-
eral employment exceeded $3,000 not accepted). Cf. Friedman v. Interna-

176 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES

tional Ass'n of Machinists, 220 F.2d 808 (D.C.Cir. 1955) (value of mem-
ber's explusion from union measured by loss of wages) . One line of cases
that formerly were troubled by the jurisdictional-amount requirement in-
volved the preferential employment rights of veterans. See Christner v.
Poudre Valley Co-op. Ass'n, 134 F.Supp. 115 (D.Colo. 1955), aff'd, 235
F.2d 946 (10th Cir. 1956). This particular problem has now been cured
by a statute specifically providing for federal jurisdiction in such cases
without regard to jurisdictional amount.

Freedom from regulatory interference: Quinault Tribe of Indians v.
Gallagher, 368 F.2d 648 (9th Cir. 1966) (freedom of Indian reservation
from state civil and criminal authority) ; Gavica v. Donaugh, 93 F.2d 173
(9th Cir. 1937) (enforcement of regulations governing grazing on public
lands) ; Dewar v. Brooks, 16 F.Supp. 636 (D.Nev. 1963) (same) ; Wyo-
ming V. Franke, 58 F.Supp. 890 (D.Wyo. 1945) (creation of national
monument). Cf. Empresa Hondurena de Vapores, S.A. v. McLeod, 300
F.2d 222, (2d Cir. 1962) (employer's suit to enjoin NLRB regional direc-
tor from conducting a representation election).

Property rights: Cameron v. United States, 146 U.S. 533 (1892) ("It
is not, however, the value of the property in dispute in this case which is
involved, but the value of the color of title to this property, which is
hardly capable of pecuniary estimation, and if it were, there is no evi-
dence of such value in this case") ; Helvy v. Webb, 36 F.Supp. 243 (S.D.
Calif. 1941) (value of grazing lands) .

Military status: Jones, Jurisdiction of the Federal Courts to Review
the Character of Military Administrative Discharges, 57 Colum. L. Rev.
917, 937-41 (1957) : ". . . the jurisdictional amount may prove an insur-
mountable obstacle since the plaintiff-veteran [in military discharge sit-
uations] probably would not be able to establish that the requisite
$3,000 is involved in the controversy over the character of his discharge,
a matter as to which he has the burden of proof." See also Meador, Judi-
cial Determinations of Military Status, 72 Yale L. J. 1293, 1298 n. 27
(1963).

2. Litigating in the District of Columbia. The district court
for the District of Columbia has long been viewed as inheriting
the inherent and common-law powers of the Maryland courts.
Prior to 1962 this meant that, alone of federal courts, those in
the District of Columbia possessed the power to issue original
writs of mandamus as a general matter. The mandamus problem
was taken care of by the Mandamus and Venue Act of 1962, 28
U.S.C §§1361, 1391(e), which conferred power on district
courts everywhere to entertain "any action in the nature of man-
damus to compel an officer or employee of the United States or
any agency thereof to perform a duty owed to the plaintiff." In
addition to its mandamus power, however, the district court for
the District of Columbia also "has a general equity jurisdiction,"
Sta/rk V. Wickard, 321 U.S. 288, 290 (1944), which it may exer-
cise without regard to the amount in controversy. D.C. Code
Ann. §§ 11-521, 11-961, 11-962 (Supp. IV, 1965).

REC. 7. JURISDICTIONAL AMOUNT 177

The resulting situation is hardly a logical or defensible one.
Congress, disturbed by the inability of litigants to obtain man-
damus relief in local courts distributed around the country, con-
ferred such jurisdiction on all district courts, without regard to
amount in controversy, in 1962. The more traditional exercise
of injunctive or declaratory authority, however, remained sub-
ject to the requirement of minimum jurisdictional amount when-
ever no special federal question statute was available — except in
the District of Columbia! The same arguments that supported
the Mandamus and Venue Act of 1962 — the expense and incon-
venience of forcing litigants from all over the country to bring
their claims to a District of Columbia court — support the elimi-
nation of the remaining anachronism with respect to jurisdic-
tional amount in injunction suits against federal officers.

3. Relief "in the nature of mandamus." As has already been
indicated, the Mandamus and Venue Act of 1962, 28 U.S.C.
§§ 1361, 1391(e), was intended to provide litigants with a con-
venient local forum in actions to require a federal officer to per-
form a duty owed to the plaintiff. No jurisdictional amount is
required in actions coming within 28 U.S.C. § 1361. In situations
where the federal officer does not "owe a duty" to the plaintiff
but has unlawfully interfered with the plaintiff's rights — the
traditional situation giving rise to injunctive relief — § 1361
cannot provide the basis for federal jurisdiction. Moreover, since
an action under § 1361 is "in the nature of mandamus," there
is a risk that the court will hold that a negative decree cannot
be issued or that the ministerial-discretionary distinction and
other technicalities of mandamus law will significantly narrow
the scope of review. These problems are ably discussed by Byse
& Fiocca, Section 1361 of the Mandamus and Venue Act of 1962
and "Nonstatutory" Judicial Review of Federal Administrative
Action, 81 Harv. L. Rev. 308 (1967), who conclude that the
present existence of the mandamus remedy does not take care of
all of the troublesome limitations on the availability of non-
statutory review.

4. Section 10 of the Administrative Procedure Act as an in-
dependent source of federal jurisdiction. Section 10 of the Ad-
ministrative Procedure Act provides, subject to some qualifica-
tions, that "a person suffering legal wrong because of agency
action ... is entitled to judicial review thereof" and that "final
agency action for which there is no other adequate remedy in a
court is subject to judicial review." 5 U.S.C. §§ 701-03 (Supp.
II, 1967). It also provides that "[t]he form of proceeding for

178 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES

judicial review" may be brought "in a court of competent juris-
diction." Although the section does not in terms confer jurisdic-
tion on federal courts and was generally viewed as restating the
existing law of judicial review, some courts in more recent years
have concluded that section 10 is an independent grant of juris-
diction to review "final agency action." Brennan v. Udall, 379
F.2d 803 (10 Cir. 1967) (Interior determination which ad-
versely affected landowner's title) ; Coleman v. United States,
363 F.2d 190 (9th Cir. 1966), adhered to on rehearing, 379 F.2d
555 (1967) (Interior determination concerning the validity of a
mining claim) ; Cappadora v. Celebrezze, 356 F.2d 1 (2d Cir.
1966) (refusal of Social Security Administrative to reopen claim
for survivors' benefits) (alternative holding) ; Estrada v. Ahrens,
296 F.2d 690 (5th Cir. 1961) (Immigration and Naturalization
Service action excluding an alien from entry). It is not clear
that the jurisdiction of the district court needed to be rested on
section 10 of the Administrative Procedure Act in any of these
cases: special federal-question provisions existed in Cappadora
and Estrada; and it is probable that the minimum jurisdictional
amount under §§ 1331 could have been satisfied in Brennan and
Coleman. None of the cases contains an extensive or reasoned
discussion of the question whether section 10 is in fact an in-
dependent ground of subject-matter jurisdiction in federal courts.
A number of cases have reached the conclusion that the Ad-
ministrative Procedure Act is not a source of jurisdiction: Twin
Cities Chippewa Tribal Council v. Minnesota Chippewa Tribe,
370 F.2d 529 (8th Cir. 1967) (attack on manner of holding
tribal election) ; Chournos v. United States, 335 F.2d 918 (10th
Cir. 1964) (Interior determination concerning the validity of
placer mining claim) ; Local 54-2, Operating Engineers v. NLRB,
328 F. 2d 850 (3d Cir. 1964) (NLRB refusal to hold representa-
tion election) ; Ove Gustavsson Contracting Co. v. Floete, 278
F. 2d 912 (2d Cir. 1960) (termination of government contract) ;
Kansas Citij Power & Light Co. v. McKay, 225 F.2d 924 (D.C.
Cir, 1955) (federally-supported power program). These decisions
are no more satisfactory than those going the other way. The
Chippewa case merely states a conclusion that section 10 "does
not confer jurisdiction upon federal courts. Its purpose is to de-
fine the procedures and manner of judicial review of agency
action rather than confer jurisdiction." Chournos really involves
the separate problem of whether section 10 waives sovereign im-
munity, while the Kansas City Power case involves standing and
not subject-matter jurisdiction. The other two cases appear to be

REC. 7. JURISDICTIONAL AMOUNT 179

correctly decided on other grounds : nonstatutory review of
NLRB matters under the doctrine of Leedom v. Kyne, 358 U.S.
184 (1958), takes place in district courts rather than, as was
urged in the Local 5^2 case, in a court of appeals; and district
court jurisdiction of claims arising out of government contracts,
the matter at issue in Ove Gustavsson, is precluded because of
the existence of an adequate statutory remedy.

The Supreme Court has not yet spoken on the question, de-
spite the conflict of circuits, although in Rusk v. Cort, 369 U.S.
367, 371-72 (1962) (passport issuance), the Court appears to
have assumed that section 10 is a grant of jurisdiction. Thus the
question remains an open one.

If the Supreme Court were to hold that section 10 of the Ad-
ministrative Procedure Act is an independent ground of federal
jurisdiction, that holding would go far to ameliorate the problems
with which this recommendation is concerned. Cases seeking ju-
dicial review of federal administrative action would be enter-
tained by federal courts without regard to jurisdictional amount,
except in those situations exempt from the Administrative Pro-
cedure Act or included within the qualifying phrase of section
10: "except to the extent that — (1) statutes preclude judicial
review; or (2) agency action is committed to agency discretion
by law. . . ."

The Committee on Judicial Review, believing that it is not
its function to interpret federal statutes, takes no position on
whether section 10 now provides for federal jurisdiction in cases
involving final action of federal ofl^cers or agencies. The Commit-
tee merely states a conclusion of policy — there should be no
jurisdictional-amount limitation on suits against federal officers
seeking injunctive and declaratory relief. Since it is at least
doubtful whether this objective can be reached by interpretation
of existing legislation, the Committee urges enactment of specific
legislation to handle the problem.

It should be noted again that the grant of subject-matter
jurisdiction without regard to jurisdictional amount would not
impair the doctrine of sovereign immunity or affect any of the
other rules and doctrines that limit the availability and scope
of judicial review of official action: (1) the plaintifl^'s lack of
standing; (2) the absence of a matured controversy; (3) the
availability of an alternative remedy in another court; (4) the
express or implied preclusion of judicial review; (5) the commis-
sion of the matter by law to the defendant's discretion; (6) the
privileged nature of the defendant's conduct; (7) the plaintiff's

180 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES

failure to exhaust his administrative remedies; and (8) the dis-
cretionary authority of a court to refuse relief on equitable
grounds.

RECOMMENDATION NO. 8

JUDICIAL REVIEW OF INTERSTATE COMMERCE
COMMISSION ORDERS

RECOMMENDATION

Judicial review of orders of the Interstate Commerce Commis-
sion in cases where at present a special three-judge District
court is used under 28 U.S.C. 2325 should be by petition to re-
view in the U.S. Courts of Appeals in the same general manner
as review of agency orders under the Judicial Review Act of 1950,
28 U.S.C. (Supp. II, 1967) 2341-2352.

181

REPORT OF THE COMMITTEE ON JUDICIAL REVIEW
IN SUPPORT OF RECOMMENDATION NO. 8

For historical reasons, procedures for review of orders of the
Interstate Commerce Commission differ from the usual patterns
which have developed governing judicial review of administra-
tive action. Since 1903 orders of the Commission (other than
those involving only the payment of money) have been reviewed
by three-judge district courts specially constituted under author-
ity of 28 U.S.C. 1336, 2284, and 2325. The decisions of these
courts may be taken to the Supreme Court by direct appeal
rather than by petition for certiorari.

The 1961-62 Administrative Conference of the United States
considered the question fully and concluded that the reasons for
conforming procedures for review of these orders to accepted
concepts of judicial review far outweigh the reasons for per-
petuating present procedures. In particular, substitution of the
court of appeals for three-judge district courts and elimination
of direct appeals to the Supreme Court would reduce the heavy
strain on judicial resources imposed by the convening of three-
judge district courts and lighten the docket of the Supreme
Court. Recommendation 3 of the 1961-62 Administrative Con-
ference proposed the elimination of the use of special three- judge
district courts for review of these ICC orders and the substitu-
tion of review in courts of appeals as is generally the case with
orders of other Federal regulatory agencies. Recommendation 4
proposed further procedures for improving judicial review of ICC
orders, all of which were designed to increase efficiency and save
time, effort, and expense in appellate procedures.

Identical bills incorporating the substance of Recommenda-
tions 3 and 4 were introduced in the 90th Congress, Second Ses-
sion as S. 2687 and H.R. 13927. S. 2687 was passed by the Senate,
n4 Cong. Rec. SI 0282 (Sept. 5, 1968), but no action was taken
in the House of Representatives. It appears likely that the bills
will be reintroduced in the next session of Congress.

The reasons that supported Recommendations 3 and 4 remain
as valid today as they were six years ago. A detailed statement
of those reasons is contained in the reports submitted by the
Committee on Judicial Review to the previous Administrative

182

REC. 8. REVIEW OF ICC ORDERS 183

Conference in support of Recommendations 3 and 4, attached
hereto as Appendix I. We urge the reaffirmation of these
recommendations.

APPENDIX A
1961 RECOMMENDATIONS 3 AND 4 WITH SUPPORTING REPORT

RECOMMENDATION NO. 3

It Is Recommended That —

(1) review of Interstate Commerce Commission orders should be upon ap-
peals to the United States Courts of Appeals in all cases where at present a
special three-judge court is used; district courts should be relieved of their
jurisdiction of such cases under 28 U.S.C. 1336, and the courts of appeals
should have exclusive jurisdiction to review these orders of the Commission;

(2) final review of orders of the Interstate Commerce Commission by the
Supreme Court of the United States should be only by petition for a writ of
certiorari;

(3) review of Interstate Commerce Commission orders should be permitted
in any judicial circuit wherein is the residence or principal office of the party
or any of the parties filing the request for review.

RECOMMENDATION NO. 4

It Is Recom.me7ided That —

Procedures for judicial review of orders of the Interstate Commerce Com-
mission by courts of appeals should incorporate the following features:

(1) A limit of 60 days should be imposed as the time within which a peti-
tion for review must be filed in any case for which the present statutory
provisions do not fix a period for filing petitions for review, such 60-day pe-
riod to run from the date of entry of the order appealed from or entry of an
order denying reconsideration thereof where petitions for consideration are
allowed by the Commission's rules, whichever is later.

(2) Appeals should be commenced by the filing of a petition for review in
the form of a notice of appeal.

(3) Anyone seeking review should be required to serve notice of appeal
upon all parties to the proceeding before the Commission, the Department of
Justice, and the Commission.

(4) When several appeals are taken from the same order of the Commis-
sion, the venue should be determined by the first notice of appeal to be filed,
and all subsequent appeals should be considered as taken to the same court,
consolidated therewith, and handled as one appeal.

(5) The Commission should provide the record of its proceedings on appeal
and should transmit the record to the court. Until such time as procedures
are developed whereunder the Commission may use mechanical facilities and
methods for the production of the record in its proceedings in such form as to
obviate printing or other reproduction of the record for judicial review, and
provision is made for the designation of record after the filing of briefs, as
recommended by the Conference, the record on appeal should consist of

184 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES

the entire record before the Commission, and should be transmitted to the
court within the time allowed for the filing of briefs. The record should be
returned to the Commission upon final decision of the appeal.

Supporting Report of the Committee on Judicial Review

We ask that the Administrative Conference of the United
States adopt the following recommendations :

1. The Administrative Conference recommends that review of
Interstate Commerce Commmission orders should be by appeal to
the Courts of Appeal in all cases where at present a special three
judge court is used. District Courts should be relieved of their
jurisdiction under 28 U.S.C. 1336 and the Courts of Appeal
should have exclusive jurisdiction to review these orders of the
Commission.

2. The Administrative Conference recommends that final re-
view by the Supreme Court of Interstate Commerce Commission
orders should be only by petition for a writ of certiorari.

3. The Administrative Conference recommends that review of
Interstate Commerce Commission orders should be permitted in
any judicial circuit wherein is the residence or principal office
of the party or any of the parties filing the request for review.

4. The Administrative Conference recommends that there
should be a 60 day time limit on all appeals from Interstate Com-
merce Commission orders to the Courts of Appeal. Notice of ap-
peal should be filed within 60 days after entry of the order ap-
pealed from or after entry of an order denying reconsideration
of such order where petitions for reconsideration are alllowed by
the Commission's rules, whichever is later.

5. The Administrative Conference recommends that the In-
terstate Commerce Commission should provide and transmit the
record upon appeal. Until effectuation of the Recommendations
in Group II, the record on appeal should consist of the entire
record before the Commission and should be transmitted to the
Court within the time allowed for submission of the final briefs
of appellees on the appeal. The record should be returned to the
Commission upon final decision of the appeal, or upon the print-
ing of the record on appeal to the Supreme Court, whichever is
earlier.

6. The Administrative Conference recommends that when sev-
eral appeals are taken from the same order of the Interstate
Commerce Commission, the venue should be determined by the
first notice of appeal to be filed, and all subsequent appeals should

REC. 8. REVIEW OF ICC ORDERS 185

be considered as taken to the same court and consolidated there-
with and handled as one appeal.

7. The Administrative Conference recommends that appeals
from Interstate Commerce Commission orders should be com-
menced by the filing of a petition for review in the form of a
notice of appeal.

8. The Administrative Conference recommends that anyone
seeking review of an Interstate Commerce Commission order
should be required to serve notice of appeal upon all of the parties
to the proceeding before the Commission, and upon the Depart-
ment of Justice, and the Commission. Anyone who is a party to
the proceeding before the Commission may intervene as of right
in the review proceeding by giving timely notice thereof to the
Court, the Commission, the Department of Justice, and all the
other parties within 30 days after receiving notice of the appeal.
Thereafter, intervention may also be allowed at the discretion
of the court.

Note: None of the above recommendations are intended to change the
present law with respect to reviewable acts, the scope of review, or the
existing allocation of responsibility and authority between the Commission
and the Department of Justice in actions to review or set aside orders of
the Commission.

Comments

1. Under the present system, orders of the ICC are reviewed
by specially-constituted three- judge federal district courts. 28
U.S.C. 1336, 2284, 2325. It should be noted, however, that so-
called reparation orders of the ICC are reviewable by single
judge district courts, although these make up only a minor part
of judicial review of ICC orders. For all other orders, exclusive
jurisdiction for review rests with three-judge district courts;
this system has been in effect since February, 1903, although its
present statutory base is the Urgent Deficiencies Act of 1913.

2. To the best of our knowledge, the ICC is the sole agency of
the United States Government the orders of which are review-
able by three-judge courts. The systems for orders of other agen-
cies, such as the FCC, which formerly were so reviewable have
now been changed to provide for review by the Courts of Appeals.

Note: We understand that, with respect to the Department of Agriculture,
some use has been made of three-judge courts for review of some D/A
programs pursuant to the provisions in 28 U.S.C. Sees. 2281-2282, in con-
nection with injunctions. We are, however, of the opinion that this is a
relatively minor problem and should be handled separately from the present
problem.

186 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES

3. The decisions on ICC orders by three-judge district courts
now may be appealed directly to the United States Supreme
Court. (This is not a certiorari proceeding.)

4. In the six-year period from July, 1955 to June, 1961, 398
actions challenging orders of the ICC were instituted. Of these,
159 came in the period of July, 1959 to June, 1961. Orders under
attack most often were those involving: rate questions, the grant
or denial of certificates of public convenience and necessity and
permits; the interpretation of such certificates and permits;
mergers and acquisitions; and abandonment and extension of
railroad lines,

5. The average length of time from the filing of the complaint
to the decision in the district courts, with respect to those cases
terminated during the three-year period ending June, 1961, was
approximately nine months. Several cases pending for more than
two years make that figure somewhat misleading.

6. By and large, with some exceptions, review of the orders of
federal administrative agencies is by the Courts of Appeals. This
includes the Federal Communications Commission, the Federal
Maritime Board, the Federal Power Commission, the Federal
Trade Commission, the Securities and Exchange Commission,
and the National Labor Relations Board.

Thus it would seem that the trend of modern review statutes
is toward use of the several Courts of Appeal. Furthermore, while
we understand that some trouble has resulted so far as the FCC
is concerned, chiefly because of dual avenues of appeal, it would
appear that this trend has been generally efficacious.

7. Although we do not as yet have access to complete data for
all of the Courts of Appeals, it would seem that Court of Appeal
review of administrative orders, as a general rule, may require a
little longer period of time than does the three-judge system now
in use for the ICC. For the Court of Appeals for the District of
Columbia, which perhaps is the most important of the several
circuits so far as review of administrative orders is concerned,
the median length of time for review of such orders during the
past three fiscal years is as follows:-

Fiscal Year 1959 Fiscal Year 1960 Fiscal Year 1961

Approximately Approximately Approximately

9 months 10.6 months 10.5 months

In our judgment, however, this fact — even if it is borne out
by data from the other Courts of Appeals — should not be con-
sidered conclusive of the question under discussion. At least the

REC. 8. REVIEW OF ICC ORDERS 187

following other factors must be weighed and evaluated before
reaching a conclusion: (a) the differences, if any, in the type of
orders reviewed by the Courts of Appeals from the other agencies
as compared to those reviewed by three-judge courts; (b) the
importance to be given to the most efficient use of the time of
district judges; is the small gain worth the time and trouble of
convening three-judge courts? (c) the possible greater degree
of expertise in judges of the Courts of Appeals in reviewing ad-
ministrative orders as compared with the district judges; and
(d) the desirability of whether ultimate review by the Supreme
Court should be by appeal or by the discretionary writ of cer-
tiorari. We believe that the possible — although not yet proved —
saving in time for review is outweighed by the other factors
mentioned.

8. There is the question whether final review by the Supreme
Court should be by appeal as of right or by discretionary writ of
certiorari. Although we recognize that arguments may be found
on both sides, it is our belief that final review by the Supreme
Court of ICC orders should be by writ of certiorari. Our reasons
for this position include: (i) apparently, many appeals today
from three-judge courts are handled strictly on the pleadings,
with no more attention being given to them than for a denial of
certiorari in other cases; (ii) the Supreme Court has been criti-
cized of late for assuming too heavy a load; (iii) we perceive no
reason why transportation is any more important to the Ameri-
can people than communications, labor relations or natural gas
matters, all of which are now subject to final review only by
certiorari.

9. Should all of the Courts of Appeal be utilized in review of
ICC orders or only one (e.g., the Court of Appeals for the Dis-
trict of Columbia) ? There are arguments both ways. Reference
to a single Court of Appeals permits the judges of that court to
become highly skilled in the intricacies of the agency and thus
to render decisions and opinions of high quality. On the other
hand, it seems that the ICC bar is relatively decentralized
throughout the United States and it might place a burden upon
litigants and their attorneys to have to resort to one Court of
Appeals only.

We believe that it is in the interests of furthering progress
while placing as minimal a strain on existing procedure as is
possible to provide for resort to the several Courts of Appeals.

10. There is no statutory time limit for the institution of ac-
tions to review orders of the ICC, other than reparation orders,

188 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES

but the doctrine of laches does apply. We believe that there
should be a fixed time limit, and accordingly recommend the
provision of 60 days as that limit.

11. Under present procedure, the party seeking review of an
ICC order has to furnish a copy of the record before the Com-
mission, get it certified by the Commission, and file it in court.
This is at the expense of the party seeking review. Unlike other
agencies, the ICC is not required to supply or file the record of
its proceedings with the court.

Although we understand that the plaintiff need not file a cer-
tified copy of the entire record before the ICC unless he attacks
the substantiality of the evidence to support the Commission's
conclusions (as he usually does), and also that the record is not
printed unless an appeal is taken to the Supreme Court and that
Court consents to hear the case on oral argument, we believe that
the ICC procedure with respect to the record should be brought
into conformity with that of other agencies.

12. Under present procedure there is no provision for consoli-
dating into a single court multiple suits against a single ICC
order. We understand that it frequently happens that several ac-
tions are started in two or more districts. In our opinion, this
practice should be brought into consonance with modern review
statutes by a provision that the first notice of appeal to be filed
should determine venue, and that all other appeals of that order
should be consolidated therewith.

13. The form of review of ICC orders should be changed from
the present, original action to that of an appeal, commenced by
a petition for review in the form of a notice of appeal.

14. Under present procedure, in actions to set aside ICC or-
ders, the United States is the only necessary party upon whom
service of process is required. Other parties to the case before
the ICC usually do not have actual notice that the case is being
reviewed. We believe that all parties should be notified. Accord-
ingly, we recommend that provision be made for the burden of
giving notice of appeal from an ICC order to be placed upon the
appellant, that party to be responsible for service of appropriate
notice upon all parties to the proceeding before the ICC and
upon the ICC and the Department of Justice.

15. The Judicial Conference adopted a resolution in 1943 to
the effect that "review of orders of the Interstate Commerce Com-
mission . . . now reviewable by a district court of three judges
from whose decision an appeal lies to the Supreme Court, should
be made upon petition to the appropriate circuit court of appeals

REC. 8. REVIEW OF ICC ORDERS 189

on the record made before the administrative body; that any
further review should be by the Supreme Court on petition for
writ of certiorari, and that the United States and the Commis-
sion should each have the right to petition for writ of certiorari."
This action by the Judicial Conference was taken as a result of
a representation by Chief Justice Harlan F. Stone in 1942 that,
under existing law, the time of the Supreme Court was being
taken in the consideration of appeals of right from three- judge
district courts in relation to orders of the Interstate Commerce
Commission which did not involve issues important enough to go
to that Court, and that the method of review ought to be by cer-
tiorari, optional with the court, as is most other cases." (Hear-
ings before Subcommittee No. 3 and Subcommittee No. 4 of the
Committee on the Judiciary, House of Representatives, on H.R.
1468, H.R. 1470, and H.R. 2271 of the 80th Congress, and Hear-
ings before Subcommittee No. 2 on H.R. 2915 and H.R. 2916 of
the 81st Congress) (1949) (the chronology is set out therein on
pages 78 et seq., in a letter dated January 23, 1947, from the
Director of the Administrative Office of the United States Courts
to the Speaker of the House of Representatives) .

RECOMMENDATION NO. 9

STATUTORY REFORM OF THE SOVEREIGN IMMUNITY

DOCTRINE.

The technical legal defense of sovereign immunity, which the
Government may still use in some instances to block suits against
it by its citizens regardless of the merit of their claims, has be-
come in large measure unacceptable. Many years ago the United
States by statute accepted legal responsibility for contractual
liability and for various types of misconduct by its employees.
The "doctrine of sovereign immunity" should be similarly lim-
ited where it blocks the right of citizens to challenge in courts
the legality of acts of governmental administrators. To this end
the Administrative Procedure Act should be amended.

RECOMMENDATION

1. Section 702 of title 5, United States Code (formerly section
10(a) of the Administrative Procedure Act), should be amended
by adding the following at the end of the section :

An action in a court of the United States seeking relief other than
money damages and stating a claim that an agency or an officer or em-
ployee thereof acted or failed to act in an official capacity or under color
of legal authority shall not be dismissed nor relief therein denied on the
ground that it is against the United States or that the United States is
an indispensable party. The United States may be named as a defendant
in any such action, and a judgment or decree may be entered against the
United States. Nothing herein (1) affects other limitations on judicial
review or the power or duty of the court to dismiss any action or deny
relief on any other appropriate legal or equitable ground; or (2) confers
authority to grant relief if any other statute that grants consent to suit
expressly or impliedly forbids the relief which is sought.

2. Section 703 of title 5, United States Code (formerly section
10(b) of the Administrative Procedure Act), should be amended
by adding the following sentence after the first full sentence:

If no special statutory review proceeding is applicable, the action for
judicial review may be brought against the United States, the agency by
its official title, or the appropriate officer.

190

REPORT OF THE COMMITTEE ON JUDICIAL REVIEW
IN SUPPORT OF RECOMMENDATION NO. 9

Prepared by

Roger C. Cramton

Professor of Law

University of Michigan

Introduction

The doctrine of sovereign immunity is merely one piece in the
complicated puzzle of remedies against the United States and its
officials. The general pattern of which sovereign immunity is
but a piece may be described as follows :

It is now generally accepted that courts make a useful contri-
bution to administi-ation by testing the legality of official action
which adversely affects private persons. This premise, often re-
ferred to as the "presumption of reviewability," is discussed and
elaborated by L. Jaffe, Judicial Control of Administrative Ac-
tion c. 9 (1965), and by K. Davis, 4 Administrative Law Treatise
c. 28 (1958). The presumption of reviewability is reflected not
only in court decisions but in a plethora of statutes in which
Congress has provided for judicial review of federal administra-
tive action by creating remedies of special or general application.
Probably most administrative action is reviewable under these
"statutory review procedures." Moreover, two traditional areas
in which sovereign immunity was especially powerful — actions to
recover tort and contract damages from the United States — are
now covered by detailed statutory enactments: (1) contract ac-
tions against the United States have been handled since 1855 by
the Court of Claims, and, since the enactment of the Tucker Act
in 1887, also by federal district courts when the amount of the
claim does not exceed $10,000 (see 28 U.S.C. §§ 1346, 1491) ; and
(2) tort actions against the United States may be entertained
pursuant to and subject to the limitations of the Federal Tort
Claims Act of 1946 (see 28 U.S.C. § 1346(b), 1402(b), 1504,
2110, 2401, 2402, 2411, 2412, 2671-80). Although there are
gaps in each of these statutes that need reexamination (e.g., the

191

192 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES

Tort Claims Act is subject to exceptions, some of which are ques-
tionable), consideration of sovereign immunity should proceed
on the assumption that review of the adequacy of tort and con-
tract remedies against the United States is a matter of another
day.

When the existence of these statutory remedies is taken into
account, sovereign immunity comes into play primarily in those
situations in which an individual complains that the Government
or its officer has violated or intends to violate a duty which the
Constitution, a statute, or the common law imposes upon the
Government and no statutory remedy has been provided. The in-
dividual must invoke the special or general federal-question
jurisdiction of a United States district court in a nonstatutory
review proceeding seeking injunctive, mandatory, or declaratory
relief. It is in these situations that sovereign immunity may be
invoked by the Government as a limitation upon the court's juris-
diction and power. This is the area with which this recommen-
dation is concerned.

The rule that the United States cannot be sued without its
consent developed slowly during the nineteenth century as a tacit
assumption rather than a reasoned doctrine. Federal courts were
not given general federal-question jurisdiction until 1875 and
there was therefore little occasion for square holdings on the
matter. Most of the early dicta on the subject came in cases ad-
vocating a strict construction of the Court of Claims Act to pre-
clude other contract remedies. As late as 1882, Justice Miller —
striving to interpret the scope of the immunity in the light of
the reasons for it — observed that "while the exemption of the
United States and of the several States from being subjected as
defendants to ordinary actions in the courts has . . . been re-
peatedly asserted here, the principle has never been discussed or
the reasons for it given, but it has always been treated as es-
tablished doctrine." United States v. Lee, 106 U.S. 196, 207
(1882).

At various times it has been stated that the basis of the doc-
trine is (1) the traditional immunity of the English sovereign,
surviving by implication the grant of judicial power in Article
III (see Hamilton, The Federalist, No. 81) ; (2) the inability of
the courts to enforce a judgment (see Jay, C. J., in Chisholm
V. Georgia, 2 U.S. (2 Dall.) 419, 478 (1793) ; and (3) the "logical
and practical ground that there can be no legal right as against
the authority that makes the law on which the right depends"
(see Holmes, J., in Kawa'rianakoa v. Polyblank, 205 U.S. 349, 353

REC. 9. SOVEREIGN IMMUNITY 193

(1907) ). These conceptual arguments for sovereign immunity are
now totally discredited. The only rationale for the doctrine that
is now regarded as respectable by courts and commentators alike
is that official action of the Government must be protected from
undue interference. See Larson v. Domestic and Foreign Com-
merce Corp., 337 U.S. 682, 705 (1949) (Douglas, J., concurring) ;
Block, Suits Against Government Officers and the Sovereign Im-
munity Doctrine, 59 Harv. L. Rev. 1060 (1946); Byse, Proposed
Reforms in Federal "Nonstatutory" Judicial Review: Sovereign
Immunity, Indispensable Parties, Mandamus, 75 Harv. L. Rev.
1479, 1484-93 (1962); Carrow, Sovereign Immunity in Adminis-
trative Law — A New Diagnosis, 9 J. Pub. L. 1-23 (1960) ; Davis,
3 Administrative Law Treatise c. 23 (1958 and 1965 Pocket
Part) ; Jaffe, Judicial Cont^^ol of Ad^ninistrative Action 197-231,
348-53 (1965) ; Note, Re^nedies Against the United States and
Its Officials, 70 Harv. L. Rev. 827-64 (1957). The articles and
materials cited above constitute a basic bibliography on the
subject.

The doctrine of sovereign immunity has never had the effect
of insulating official conduct from judicial scrutiny and control.
Through one device or another federal courts have always enter-
tained suits which were directed against the sovereign in the
sense that the proceeding challenged official conduct and required
officials to do or not do particular things. Although not always
perceived in this fashion, largely because of the direction in
which developing doctrine channelled thinking, sovereign im-
munity has always been a question of whether particular conduct
should be reviewable in the courts and not whether the sovereign
has consented to suit.

Professor Byse has summarized the fictional metamorphosis
which allowed private individuals to obtain judicial review of
"sovereign" acts :

"In light of the failure of Congress to provide a statutory method of
review during the formative era of administrative law, a literal applica-
tion of the sovereign immunity doctrine often would have left the citizen
remediless against harsh and illegal acts of his government. Such a re-
result could not be tolerated. The courts were equal to the challenge. They
reasoned that although the sovereign principal might be immune from
suit, the privilege of the principal could not be claimed by the agent, who
therefore could be restrained from committing the wrongful act. In the
words of a leading case, a public official who acts under an unconstitu-
tional statute or outside his statutory authority is 'stripped of his official
or representative character and is subjected in his person to the conse-
quences of his individual conduct.' [Ex parte Young, 209 U.S. 123, 160
(1908). . . .] Thus a controversy that was in fact between a private

194 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES

person and the federal government was transmuted into a controversy
between two private persons. By means of this fiction the courts were
able to exert a significant measure of control over the bureaucracy."
Byse, Proposed Reforms in Federal "Nonstatutory" Judicial Review, 75
Harv. L. Rev. 1479, 1484-85 (1962).

The basic problem with the sovereign immunity doctrine is
that it has developed by fits and starts through a series of fic-
tions. The resulting patchwork is an intricate, complex and not
altogether logical body of law. The basic issue — balancing the
public interest in preventing undue judicial interference with
ongoing governmental programs against the desire to provide
judicial review to individuals claiming that Government has
harmed or threatens to harm them — is obscured rather than as-
sisted by the doctrine of sovereign immunity in its present form.

I. Sovereign Immunity Prior to Larson

One effect of the sovereign immunity doctrine was to prevent
suits against the United States eo yiomine except as Congress
had authorized such units. A complicated body of case law, how-
ever, separated situations in which an individual could obtain
relief against the Government by suing its officer and situations
in which such relief would be unavailable. The law before Lar-
son v. Domestic & Foreign Commerce Corp., 337 U.S. 682 (1949),
cast new gloom into this dark corner of the law, however, was
tolerably clear and could be stated in a general way as follows:

A. In General : Restraining Harmful Conduct

The most clearly permissible type of action against a govern-
ment official was that in which (a) the plaintiff sought to enjoin
conduct or threatened conduct which, if not ofl^cially justified,
would constitute a common-law tort, and (b) the relief sought
could be given by simply directing the defendant to abstain
from what he was doing or threatening to do. Once the plain-
tiff alleged facts that would entitle him to equitable relief against
a private citizen, the fact that the defendant was a government
officer did not provide a complete defense but merely an oppor-
tunity for justification. The sovereign-immunity doctrine failed
to provide official justification in two well- recognized kinds of
cases: (1) when the ofllicer was held to have exceeded the author-
ity delegated to him by Congress (e.g., Land v. Dollar, 330 U.S.
731 (1947) (alternative holding) ; Philadelphia Co. v. Stimson,
223 U.S. 605, 619-20 (1912) ; American School of Magnetic
Healing v. McAnnulty, 187 U.S. 94, 109 (1902)) ; and (2) when

REC. 9. SOVEREIGN IMMUNITY 195

the statute that purported to authorize the officer's act was found
to be unconstitutional {e.g., Georgia R.R. & Banking Co. v. Red-
wine, 342 U.S. 299, 304-06 (1952); Ex parte Young, 209 U.S.
123, 155-60 (1908) ; Osborn v. Bank of the United States, 22
U.S. (9 Wheat.) 738,836-37 (1824)).

When the defendant (a government officer) sought to justify
an alleged tort by showing statutory authority, the court could
not dispose of the case on the ground of sovereign immunity
without deciding the issue of statutory authority thus presented.
No distinction was attempted between an allegation of error in
the performance of generally authorized duties and an allegation
of violation of a statute. Error would support a charge of action
in excess of statutory authority unless the action was committed
to the defendant's discretion. For example, in Philadelphia Co.
v. Stimson, 223 U.S. 605 (1912), a statute authorized the Secre-
tary of War to fix a harbor line beyond which the building of
piers or other works was a misdemeanor. A property owner sued
to enjoin the Secretary from prosecuting him on account of con-
struction of a wharf beyond the line the Secretary had fixed.
The Court, in a unanimous opinion by Hughes, J., granted re-
lief against tortious interference with plaintiff's use of his land:

"The exemption of the United States from suit does not protect its of-
ficers from personal liability to persons whose rights of property they
have wrongfully invaded. . . . The principle has frequently been applied
with respect to state officers seeking to enforce unconstitutional enact-
ments. . . . And it is equally applicable to a Federal officer acting in ex-
cess of his authority or under an authority not validly conferred." 223
U.S. at 619-20.

These general ideas were modified by special sensitivity to ju-
dicial interference when the relief sought fell into any of three
special categories: (1) enforcement of contracts against the
United States; (2) directing government officers to pay over
public moneys; and (3) directing officials to give over property
which is in the possession of the United States and to which the
United States unquestionably has legal title. Each of these situa-
tions deserves some special comment.

B. Enforcement of Contracts Against the United States

The immunity of the United States from suit developed in the
context of the similar immunity of the states under the Eleventh
Amendment. The central notion underlying the Eleventh Amend-
ment was that a court cannot without consent enforce a contract
against the sovereign. The provision of a statutory contract rem-

196 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES

edy against the United States in the Court of Claims was prop-
erly viewed as an exclusive remedy. A long line of cases held
that federal courts cannot give specific performance of a contract
against the United States. E.g., Wells v. Roper, 246 U.S. 335
(1918); United States ex rel. Goldberg v. Daniels, 231 U.S. 218
(1913); Louisiana v. Jumel, 107 U.S. 711, 721, 727 (1882). The
damage remedy in the Court of Claims (or in certain instances
in the district court pursuant to the Tucker Act) is the only
remedy.

C. Orders Directing Payment of Public Moneys

A case in which the plaintiff seeks to order a government of-
ficer to pay over public funds in his possession presents a special
problem. Whether the remedy sought is mandamus or injunc-
tion, the plaintiff seeks affirmative relief of a particularly deli-
cate kind. Effective government is dependent upon an ample pro-
vision of funds, and an order requiring the public treasury to
disgorge poses a substantial threat. Consequently, the circum-
stances under which a court may compel the payment of public
moneys are restricted to those in which the official lacks discre-
tion and there is a statutory duty owed to the plaintiff. In Mine
Safety Appliances Co. v. Forrestal, 326 U.S. 371 (1945), for
example, a government contractor sought to "restrain" the Sec-
retary of Navy from withholding payments allegedly due on a
contract. The Secretary had withheld payments pursuant to the
Renegotiation Act on the ground that the plaintiff had made
excessive profits ; the plaintiff contended that the Secretary's con-
duct was unauthorized and unconstitutional. The Court dismissed
the action as one against the United States to which it had not
consented. Although framed as a suit for a prohibitory injunc-
tion, the plaintiff in fact sought to compel the payment of gov-
ernment funds in a situation in which Congress had not directed
that such payments be made. Plaintiff's contract remedy in the
Court of Claims was a perfectly adequate one. See also Morrison
V. Work, 266 U.S. 481, 488 (1925) (suit to require officers to sell
Indian reservation lands and distribute proceeds to various claim-
ants barred by sovereign immunity) .

On the other hand, where a statute imposes a clear duty upon
a government officer to pay a claimant, mandatory relief is avail-
able in the federal courts. E.g., Miguel v. McCarl, 291 U.S. 442
(1934) (mandatory injunction against disbursing officer requir-
ing him to pay retirement allowance to which plaintiff was en-
titled by law) ; Roberts v. United States, 176 U.S. 221 (1900)

REC. 9. SOVEREIGN IMMUNITY 197

(mandamus directing Treasurer to make certain payments which
an Act of Congress, as construed by the Court, required him to
make) ; Clackamas County, Oregon v. McKay, 219 F. 2d 479
(D.C. Cir. 1954), vacated as moot, 349 U.S. 909 (1955) (man-
damus directing Secretary of Interior to distribute to certain
counties in Oregon the monetary proceeds received by him from
the sale of land which had reverted to the United States after
certain grantee railroads had forfeited their rights to it; the
only action required of the Secretary, according to the court's
construction of the statute, was "ministerial" rather than "dis-
cretionary").

D. Orders Directing the Transfer of Government Property

Apart from cases in which the United States is named as a
party defendant, the clearest class of cases which were open to
the defense of sovereign immunity under the pre-Larson law
were actions to establish an interest in, or satisfy a claim out
of, property of the United States, where the United States un-
questionably had title and the property was in possession of its
officers or agents. E.g., Maricopa County v. Valley Nat. Bank,
318 U.S. 357, 362 (1943) ; Minnesota v. United States, 305 U.S.
382 (1939) ; Oregon v. Hitchcock, 202 U.S. 60, 69 (1906) ; The
Siren, 74 U.S. (7 Wall.) 152, 154 (1868). Even in this situation,
however, mandatory relief is available if a statute imposes a clear
duty on the officer in favor of the claimant. E.g., Wilber v.
United States ex rel. Krushnic, 280 U.S. 306 (1930) (mandamus
granted directing the Secretary of the Interior to issue a mining
patent); Payne v. Central Pac. Ry., 225 U.S. 228 (1921) (Sec-
retary of the Interior enjoined from interfering with railroad's
selection of indemnity lands when Secretary was under a "plain
official duty" without discretion "to substitute his judgment for
the will of Congress") ; Lane v. Hoglund, 244 U.S. 174 (1917).

One situation in which the law was unclear prior to Malone
V. Bowdoin, 369 U.S. 643 (1962), discussed at pp. 15-17, infra,
was that in which the plaintiff claims title to specific property
and the officer defends on the ground that title is in the United
States. A venerable earlier case granted relief in this situation.
United States v. Lee, 106 U.S. 196 (1882), but other cases had
refused to do so, asserting that the action was against the United
States if the property is in its possession. E.g., Goldberg v. Dan-
ieU, 231 U.S. 218, 221-22 (1913) ("the United States is the
owner in possession of the vessel") ; Oregon v. Hitchcock, 202
U.S. 60, 70 (1906) ("again, it must be noticed that the legal

198 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES

title to all these tracts of land is still in the Government") ; cf.
West Coast Exploration Co. v. McKay, 213 F.2d 582, 596 (D.C.
Cir. 1954).

II. Defects of Present Law

Professors Hart and Wechsler have suggested that "the Su-
preme Court in modern times has , . . tended actually to enlarge
the scope of sovereign immunity, out of misapprehension of its
historical foundations, while at the same time professing to re-
gard it with disfavor as an anachronism which should be nar-
rowly confined." Hart & Wechsler, The Federal Courts and the
Federal System 1151 (1953). This comment, made in 1953, is
even more true today. A series of Supreme Court decisions, be-
ginning with Larson v. Domestic & Foreign Commerce Corp., 337
U.S. 682 (1949), and culminating in Hawaii v. Gordon, 373 U.S.
57 (1963), have strengthened the hold of the sovereign immunity
doctrine, created widespread confusion, and directed attention
to fictions rather than real problems. If the law of sovereign im-
munity is in need of reform it is largely because Supreme Court
decisions of the last two decades have further complicated a sub-
ject that was already confused.

A. The Larson Case

In Larson v. Domestic & Foreign Commerce Corp., 337 U.S.
682 (1949), the War Assets Administrator contracted to sell coal
to the plaintiff, but after disagreement over a term of the con-
tract he arranged to sell the coal to a third person. The plaintiff
sought to enjoin sale of the coal to anyone but himself, charging
that, since title to the coal had passed under the contract of sale,
the Administrator was guilty of conversion. The Court denied
injunctive relief in a cloudy opinion by Vinson, C. J., that at-
tempted to restate the law of sovereign immunity applicable to
suits for nonmandatory injunction against government officers.
A suit may be brought against an oflficer if the officer has acted
"unconstitutionally" or "ultra vires his authority." But the mere
allegation that the officer, "acting ofllicially" wrongfully holds
plaintiff's property, while establishing a wrong to plaintiff, does
not establish "that the officer ... is not exercising powers dele-
gated to him by the sovereign." 337 U.S. at 693. And, again, "a
suit may fail ... if the relief requested cannot be granted by
merely ordering the cessation of the conduct complained of but
will require affirmative action by the sovereign or the disposition
of unquestionably sovereign property." Id., at 691, n. 11.

REC. 9. SOVEREIGN IMMUNITY 199

The case itself fell squarely between two conflicting lines of
authority, one, stemming from United States v. Lee, 106 U.S. 196
(1882), and Land v. Dollar, 330 U.S. 731 (1947), in which in-
junctive relief had been granted for tortious withholding of prop-
erty now in the possession of the Government, and the other, as
in Goldberg v. Daniels, 231 U.S. 218 (1918), denying relief when
the property that the plaintiff complained he had contracted for
was in the possession of the Government. The Court could have
reached the same result that it did reach by treating the case
as an impermissible attempt to obtain specific performance
against the Government, or on the ground that plaintiff's proper
and adequate remedy was a suit for damages in the Court of
Claims.

It is surprising that the Larson opinion has had so much in-
fluence. The case was decided by a divided Court (6-3) with
Rutledge, J., concurring only in the result and Douglas, J., con-
curring on the narrow ground that an injunction in the situa-
tion presented would interfere with the surplus property pro-
gram. Vinson's opinion, which was confused and rambling, thus
had the support of only four members of the Court. It purported
to overrule or narrowly limit several well-established lines of
cases, including Land v. Dollar, 330 U.S. 731 (1947), decided
only two years before. Nevertheless, the Larson opinion has been
taken as the modern keystone of the sovereign immunity doctrine.

The Larson opinion has four fundamental defects. (1) It holds
that the official's conduct, although wrongful, may not be en-
joined if he is acting within the general sphere of his authority.

(2) It determines the application of the sovereign immunity
doctrine by a wholly irrelevant test — whether the Government,
if a private principal, would be liable for the acts of its agent.

(3) The application of sovereign immunity is said to turn on
whether the suit is "in effect, a suit against the sovereign"
"stopping the Government in its tracks." And (4) the opinion
states that affirmative relief may not be granted against a Gov-
ernment officer.

1. "Error" distinguished from "authority." The Larson opin-
ion limits suits to enjoin officers to :

"[W]here the officer's powers are limited by statute, his actions be-
yond those limitations are considered individual and not sovereign ac-
tions. . . . His actions are ultra vires his authority and therefore may be
made the object of specific relief. It is important to note that in such
cases the relief can be granted, vi^ithout impleading the sovereign, only
because of the officer's lack of delegated power. A claim of error in the
exercise of that power is therefore not sufficient. . . ." 337 at 689-90.

200 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES

At a later point in the opinion the Court again distinguishes
between action which is erroneous or wrongful ("error") and
action which is within the officer's general competence ("author-
ity") :

"It is argued that an officer given the power to make decisions is only
given the power to make correct decisions. . . . There is no warrant for
such a contention in cases in which the decision made by the officer does
not relate to the terms of his statutory authority. Certainly the jurisdic-
tion of a court to decide a case does not disappear if its decision on the
merits is wrong. And we have heretofore rejected the argument that of-
ficial action is invalid if based on an incorrect decision as to law or fact,
if the officer making the decision was empowered to do so." 337 U.S. at
695.

Congress, of course, may commit administrative action to
agency discretion, thus foreclosing judicial review except for ar-
bitrary or capricious action. "The vice of Larson," however, as
Professor Byse has stated, is that it permits — perhaps even en-
courages — "courts to shirk the hard task of determining the lim-
its of official power" :

"It is perfectly possible for a court to hold that an official has au-
thority to make erroneous as well as correct determinations. Such a hold-
ing, of course, should rest on a reasoned determination that Congress
intended to confer so broad a discretion. But under Larson [and its prog-
eny] the courts seem to interpret that statutes cursorily to authorize
the defendant official to act in the 'general' area in question; so long as
the official remains within the 'general' area, his erroneous acts are un-
reviewable whether or not the statute properly construed was intended to
confer such an unreviewable discretion. This, I submit, is an abdication
of judicial responsibility." Byse, Proposed Reforms in Federal "Non-
statutory" Judicial Review, 75 Harv. L. Rev. 1479, 1490-91 (1962).

The Larson opinion is thus susceptible to the interpretation
that the existence of "statutory authority" need not depend upon
a careful construction of the statute in question, but that the
case should be dismissed on sovereign immunity ground if the
officer is acting within his general sphere of authority even
though the particular action is prohibited by the statute prop-
erly interpreted.

Numerous decisions of lower federal courts support the prop-
osition that Larson's distinction between "error" and "general
authority" has been applied to deprive litigants of judicial con-
sideration of the merits of their claim that an officer's conduct
is unlawful. In Doehla Greeting Cards, Inc. v. Summerfield, 227
F.2d 44 (D.C. Cir. 1955), users of the parcel post service brought
an action against the Postmaster General to enjoin him from
enforcing increased parcel post zone rates. Plaintiffs alleged that

REC. 9. SOVEREIGN IMMUNITY 201

the Postmaster General had failed to comply with a statutory
requirement and that the rate order was arbitrary and capri-
cious. The court dismissed on the ground that the suit was "one
against the United States to which no consent had been given."
The opinion seems to state, relying on Larson, that erroneous per-
formance of a statutory duty is the act of the sovereign and
cannot be enjoined. Unlike the situation in Larson, however, the
basic postal law sets forth standards to be observed by the Post-
master General when fixing rate changes of the sort in question
in Doehla. To say that the defendant may not be enjoined despite
a departure from those standards is to flout their very existence.
The statute was not construed but ignored. The official is given
a wholly unchecked discretion where such discretion was prob-
ably denied to him by statute and without inquiry into whether
Congress intended such discretion.

Manhattayi-Bronx Postal Union v. Gronouski, 350 F.2d 451
(D.C. Cir. 1965), is to much the same effect, although the court
did undertake in an alternative holding to consider the merits
of the claim that the Postmaster General had misconstrued an
executive order dealing with collective bargaining by postal
employees.

Another troublesome case along similar lines is Kennedy v.
Rabinowitz, 318 F.2d 181 (D.C. Cir. 1963), aff'd on other
ground, 876 U.S. 605 (1964), in which the court refused to con-
sider plaintiffs' argument that under the terms of the Foreign
Agents Registration Act the Attorney General could not require
them to register. The general power of the Attorney General "to
construe the individual statutes and apply them to the facts be-
fore him" was sufficient to authorize his action and to shield it
behind the sovereign-immunity defense. A dissenting opinion
pointed out the weakness of the majority's opinion. On certi-
orari, the Supreme Court ignored its own repeated holdings that
sovereign immunity is a jurisdictional issue and proceeded to
decide the case against the plaintiffs on the merits.

Other cases in which the court failed to construe the statute
to determine whether Congress intended the officer to exercise
unchecked discretion include Fay v. Miller, 183 F.2d 986 (D.C.
Cir. 1950) (United States attorney has authority to request the
telephone company to discontinue service to a plaintiff suspected
of gambling, even though the attorney's action might be tortious
and taken without sufficient evidence) ; Interstate Reclamation
Bureau v. Rogers, 103 F. Supp. 205 (S.D. Tex. 1952) (local offi-
cials of Department of Labor held to have "authority" to investi-

202 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES

gate, and even harass, an employer in attempts to induce com-
pliance with the Fair Labor Standards Act, even though the
court admitted that the employer's business might eventually be
found not to be within the operation of the Act) .

2. Reliance on "normal rules of agency." A related defect of
the Larson opinion has also had the eflect of increasing greatly
the plaintiff's burden of demonstrating an official departure from
statute. The Court in Larson insisted that a showing of illegality
under general law is not sufficient, the determinative question
being whether the agent's act is that of the United States. When
injunctive relief is sought the answer to this question was said
to depend on whether the officer has "authority" in the sense
that his actions would be regarded as those of a private principal
under the normal rules of agency.

As Professor Byse has said :

"The weakness of [the Larson] reasoning is its failure to deal with
a practical problem in practical terms. The basic issue is whether the ju-
diciary should review alleged errors by administrative officials. Because
Congress failed to provide a general mechanism for such reviews, the
courts developed the fiction that suits to restrain unconstitutional or
ultra vires acts were not suits against the government. The reason for
the fiction was the practical judgment that although courts should not
generally interfere with governmental operations, they should be availa-
ble to correct administrative excesses. The issue in any doubtful case
should be resolved with those practical considerations in mind. Instead of
analyzing the problem in these terms, the Larson opinion resolves the
issue by reference to the 'normal rules of agency.' But the reasons which
have caused courts to impose liability on private principals for the acts
of their agents have little if any relevance to the question whether al-
legedly unlawful administrative actions should be subject to judicial re-
view. The incongruous result of the Larson case is that to the extent the
normal rules of agency impose liability on private principals, govern-
mental officials are immunized from injunctive or declaratory relief. As
private liability expands, official responsibility decreases." Byse, Pro-
posed Reforms in Federal "Nonstatutory" Judicial Reviews, 75 Harv. L.
Rev. 1479, 1487-88 (1962).

Despite the incongruity of having Government nonliability
turn on whether a private principal would be liable, and vice
versa, lower federal courts have sometimes followed the Larson
approach. In Hudspeth County Conservation & Reclamation Dist.
No. 1 V. Robbins, 213 F.2d 425 (5th Cir. 1954), for example, the
court cited Larson and then concluded: "Applying that test, it
seems clear to us that if the dams . . . had been owned by a
private corporation whose managers and agents had violated the
rights of the plaintiffs in the manner contended in this suit, the
private corporation could not escape liability for damages on the

REC. 9. SOVEREIGN IMMUNITY 203

ground that its employees were acting outside the scope of their
authority." 213 F.2d at 432.

3. Whether a suit is "in effect, a suit against the sovereign."
Legal fictions may occasionally serve a useful purpose in hasten-
ing a transition to sounder rules of law. In emphasizing the fic-
tional aspects of the sovereign-immunity doctrine, however, the
Larson opinion merely obfuscates the underlying policy consid-
erations. The Court stated that in each injunction suit "the ques-
tion is directly posed as to whether, by obtaining relief against
the officer, the relief will not, in effect, be obtained against the
sovereign" because "the compulsion . . . may be compulsion
against the sovereign, although nominally directed against the
individual officer. If it is, then the suit is barred . . . because
it is, in substance, a suit against the Government." 337 U.S. at
688. The problem with this formulation is that all injunction
suits against government officers are designed to provide judi-
cial control of administrative excesses. In Joint Anti-Fascist Ref-
ugee Comm. V. McGrath, 341 U.S. 123 (1951), the plaintiff
organization sought a declaratory judgment and injunctive re-
lief against the Attorney General for having placed its name on
the subversive list without a hearing. The Court held that, for
purposes of a motion to dismiss, the Attorney General's act would
be treated as unauthorized since it was alleged to be purely ar-
bitrary. The injunction surely "stopped the Government in its
tracks" and, in that sense, was directed against the sovereign.
Hosts of similar injunction proceedings have been brought
against federal officers. In recent years, for example, the Court
has ordered the Government to reinstate an employee, Vitarelli
v. Seaton, 359 U.S. 535 (1959), in effect ordered the Government
to restore a revoked security clearance, Greene v. McElroy, 360
U.S. 474 (1959), and in effect ordered the Government to carry
particular mail. Manual Enterprises, Inc. v. Day, 370 U.S. 478
(1962).

4. Whether affirmative relief may be granted. A footnote to
the Larson opinion contained a troublesome dictum:

"Of course, a suit may fail, as one against the sovereign, even if it is
claimed that the officer being sued has acted unconstitutionally or beyond
his statutory powers, if the relief requested cannot be granted by merely
ordering the cessation of the conduct complained of but will require af-
firmative action by the sovereign or the disposition of unquestionably
sovereign property." 337 U.S. at 691, n. 11.

If "may" is read as "may" rather than "must," this sentence is
not especially confusing. But since the sentence does not indicate

204 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES

any factors to be considered in determining whether affirmative
relief is appropriate it suggests that mandatory relief cannot be
granted. This erroneous notion has been picked up in subsequent
decisions (see the discussion of Hawaii v. Gordon, infra) .

B. The Malone Case — Proverty Disputes

Malone v. Bowdoin, 369 U.S. 643 (1962), was an action to
eject an officer of the United States Forest Service from land
claimed by plaintiffs. The Court held that sovereign immunity
barred the action. Under Larson, the Court said, an officer may
not be sued even for the return of property wrongfully taken or
held unless the action is "not within the officer's statutory powers,
or, if within those powers, only if the powers, or their exercise
in the particular case, are constitutionally void." There was no
such allegation in Malone. Larson, the Court added, had limited
United States v. Lee, 106 U.S. 196 (1882), to cases where there
is a claim that the holding constituted "an unconstitutional tak-
ing of property without just compensation." Moreover, Lee had
been decided when there was no money remedy for the taking;
in the present case the Court of Claims was open. See United
States V. Causby, 328 U.S. 256, 267 (1946) .

If Congress had authorized federal officers to seize private
property and limited the owner's remedy to a damage action in
the Court of Claims, the procedure would be constitutional even
though harsh. But Congress has not authorized Forest Service
officers to seize private land ; and the damage remedy in a distant
forum is not a totally adequate remedy. The presumption that
an officer who takes or withholds land which is admittedly the
plaintiff's is acting without authority in absence of an affirma-
tive showing of authority is more consistent with the general
preference for judicial control of administrative excesses.

Professor Davis' criticism of Malone as "patently unsound"
is cogent:

"The Malone opinion seems patently unsound. The case came upon
motion to dismiss the action, and the Court assumed the facts to be as
stated — that the fee was in the plaintiff and that the government's claim
to the land rested only on a life tenant's transfer of a fee to the govern-
ment. On these facts, the Court should have assumed, in absence of clear
congressional intent to the contrary, that of course government officers
are not authorized to withhold land from its lawful owner, and that of
course the courts are the proper tribunals to determine who is the lawful
owner. But instead of making these obvious assumptions, the Court made
the opposite assumptions, by saying merely that the plaintiff had not as-
serted that the officer was exceeding his delegated powers.

REC. 9. SOVEREIGN IMMUNITY 205

"Mr. Justice Douglas, in an opinion with which Mr. Justice Harlan
agreed, asked in dissent: 'If legal title is actually in the claimant, if the
action of the official in taking possession under authority of the United
States is ultra vires, what objectionable interference with governmental
functions can be said to exist?'

"The majority of the Court did not answer the question. The answer is
that a judicial determination of title to land is not an objectionable in-
ference with governmental functions, even if the determination is that
the private party is the owner of the land and is entitled to its posses-
sion. What are courts for if they are barred from adjudicating disputes
about land ownership and possession? Who in the entire society is bet-
ter qualified to resolve a dispute about land titles than the courts?"
Davis, Administrative Law Treatise §27.01 (1965 Pocket Parts, p. 147).

In a number of recent cases Malone has been applied to deny
district courts jurisdiction to consider land disputes between the
United States and adjacent property owners. In Gardner v. Har-
ris, 391 F.2d 885 (5th Cir. 1968), plaintiff's predecessor-in-title
had sold land to the United States subject to an easement provid-
ing a right-of-way across the conveyed land to abutting property.
The conveyed land became part of the Natchez Trace Parkway
and the federal officer in charge of the parkway erected barri-
cades across the right-of-way. In an injunction suit seeking re-
moval of the barricades, it was held that sovereign immunity
barred the action. Judge Brown reasoned that the judgment
would compel the government to act and would interfere with
public administration ; hence suit could be brought only if the
superintendent had exceeded his statutory powers. And the
statute authorizing the superintendent to administer and main-
tain the Natchez Trace Parkway did not contain any express
limitation on the superintendent's powers of administration.
"Merely because the Superintendent may have been acting
wrongfully in interfering with plaintiff's access to the highway,
either as a matter of violation of property rights under the deeds
or as a tort under principles of general law, does not amount to
circumstances fulfilling the exception that the officer must be
acting beyond his statutory powers." 391 F.2d at 888.

The Gardner decision is the logical stepchild of Larson and
Malone, but the result is indefensible. When government officers
mistakenly seize or hold private property, such mistakes both
deprive persons of specific property and subject the United States
to liability. The relevant question is whether Congress has au-
thorized the seizure or condemnation of private property under
the circumstances that existed; and in the absence of such au-
thorization (and the limitation of the property owner to a dam-
age remedy in the Court of Claims) the injunctive remedy should

206 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES

be provided. The courts should assume that Congress intends that
officers who deal with property should keep within their powers
in taking and withholding property that is claimed by private
persons. Unless a vital regulatory program is involved (see dis-
cussion of Dugan v. Rank, infra, pp. 19-20), Congress would
probably prefer a prohibitory injunction to a grant of compen-
sation after the fact.

A substantial number of cases follow Malone in barring dis-
trict court suits to resolve property disputes between the United
States and private persons. Switzerland Co. v. Udall, 337 F. 2d
56 (4th Cir. 1964) (similar to Gardner v. Harris) ; Simons v.
Vinson, 394 F.2d 732 (5th Cir. 1968) (title to land formed by
accretion along river which formed boundary between land
owned by United States and land owned by plaintiffs; action
barred by sovereign immunity) ; Andrews v. White, 121 F.Supp.
570 (E.D.Tenn. 1954), aff'd per curiam, 221 F.2d 790 (6th
Cir. 1955) (suit by landowner to enjoin federal officers from
enforcing hunting regulations in what might have been part of
a national park barred by sovereign immunity) ; cf. Zager v.
United States, 256 F.Supp. 396 (E.D.Wis. 1966) (quiet title
action to determine whether mistake had been made in original
land survey not barred by sovereign immunity) .

Regardless of whether broad proposals to reform sovereign
immunity are accepted, the doctrine should be waived to permit
property disputes between the United States and private persons
to be entertained by district courts. Lawyers in the Department
of the Interior, the federal agency having the greatest interest
in the matter, do not oppose such a limited reform.

C. Hawaii v. Gordon — Affirmative Relief

A recent Supreme Court decision has strengthened the errone-
ous notion, earlier advanced in Larson, that affirmative relief
may not be granted against government officers. Hawaii v. Gor-
don, 373 U.S. 57 (1963), involved the provisions of the Hawaii
Statehood Act, which directed the President, if he should decide
that certain federal properties were no longer needed by the
United States, to convey them to the State of Hawaii. The Direc-
tor of the Bureau of the Budget, acting for the President, advised
federal agencies that this authorization related only to lands
that had been ceded to the United States by Hawaii. The State
filed an original action in the Supreme Court to compel the
Director to withdraw his advice, to determine whether certain
property he had excluded was "needed", and, if it was not needed,

REC. 9. SOVEREIGN IMMUNITY 207

to convey it to Hawaii. The Supreme Court dismissed the suit:
"Relief soug'ht nominally against an officer is in fact against the
sovereign if the decree would operate against the latter [citing
Dwgan v. Rank, Malone v. Bowdoin, and Larson']. Here the or-
der requested would require the Director's official affirmative ac-
tion, affect the public administration of government agencies
and cause as well the disposition of property admittedly belong-
ing to the United States."

Professor Davis argues that the "issue was not whether the
lands should be conveyed — for that question was solely for the
President — but whether a report should be made to the President
with respect to designated lands. . . . Thus, the sole question
was one of statutory interpretation." Davis, Administrative Law
Treatise § 27.01 (1965 Pocket Parts p. 148) .

A federal officer, of course, cannot be ordered by a court to
exercise discretion in a particular way. But if a statute requires
an officer to exercise discretion and the officer refuses to make the
discretionary determination, a court can interpret the statute and
require him to exercise discretion. Mandatory relief has been
granted against federal officers for many years under such cir-
cumstances; and the Hawaii case muddies the waters by sug-
gesting that affirmative relief is always barred by sovereign
immunity.

D. Dugan v. Raiik — Interference with Governmental Programs

Fictions aside, the application of the sovereign immunity doc-
trine should rest on whether the benefits of judicial review of
administrative action are outweighed by the possible interference
with governmental programs that may result from the grant of
relief. Dugan v. Rank, 372 U.S. 609 (1963), involves this question
and was correctly decided. Dugan was a suit to enjoin the United
States and officers of its Bureau of Reclamation from impound-
ing water behind Friant Dam, part of the Central Valley Project
in California, on ground that this action interfered with plaintiffs'
rights to the use of the water downstream. The Supreme Court
held that the United States had not consented to this kind of
suit despite the McCarran Amendment, 43 U.S.C. § 666, and
that the suit against the Reclamation officers must be dismissed
as in substance one against the United States. To enjoin storage
of water would require the abandonment of much of the project
and "the Government would, indeed, be 'stopped in its tracks' " ;
to order construction of subsidiary dams to meet the plaintiffs'
needs would "not only 'interfere with the public administration'

208 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES

but also 'expend itself on the public treasury.' " The only exceptions
to the rule against suits producing these effects, as announced in
Larson and Malone, were inapplicable, for the Government "had
the power, under authorization of Congress, to seize the property
of the respondents . . . , and this power of seizure was constitu-
tionally permissible."

Unlike the other recent Supreme Court opinions, the Dugan
opinion did interpret and resolve the statute, holding that Con-
gress had authorized physical seizure of the water and limited
affected persons to damage actions under the Tucker Act. More-
over, this conclusion is supported by the practical interference
with reclamation projects that would result if the contrary argu-
ment had been accepted.

The language of the Dugan opinion, however, like that of
Hawaii v. Gordon and Malone v. Bowdoin, goes beyond this nar-
row ground, suggesting that sovereign immunity is applicable
whenever "the judgment sought would expend itself on the public
treasury or domain, or interfere with the public administra-
tion, ... or if the effect of the judgment would be 'to restrain
the government from acting or compel it to act.' " As Professor
Davis has stated, "This so-called general rule never has been the
general rule and is not likely to become the general rule. Judg-
ments of courts have often expended themselves on the public
treasury or domain, have often interfered with the public ad-
ministration, and have often restrained the government from act-
ing or compelled it to act, and judgments of courts will surely
continue to do these things in the future." Davis, Administrative
Law Treatise § 27.01 (1965 Pocket Part, p. 149).

III. Objectives of the Committee's Recommendation

As the foregoing recital indicates, the Supreme Court has been
remarkably receptive to the sovereign immunity doctrine in re-
cent years. The Court now seems to regard it as settled that the
general contours of the doctrine were established in Larson v.
Domestic & Foreigyi Commerce Corp., 337 U.S. 682 (1949). Since
there is no discernible pressure for change emanating from the
Supreme Court, the impetus for reform must come from Con-
gress. Important questions of policy, calling for legislative judg-
ment, are involved and a legislative approach to the problem is
not only appropriate but desirable.

Dissatisfaction with the present doctrine of sovereign immu-
nity is widespread. Professors Byse and Davis have argued per-
suasively that the sovereign immunity doctrine constitutes a bar-

REC. 9. SOVEREIGN IMMUNITY 209

rier to proper judicial analysis; each has proposed a remedial
statute. Byse, Proposed Reforms in Federal "Nonstatutor^y" Ju-
dicial Review: Sovereign Immunity, Indispensable Parties, Man-
damus, 75 Harv. L. Rev. 1479 (1962) ; Davis, 3 Administrative
Law Treatise c. 27 (1958 and 1965 Pocket Part). Professor Jaffe
has demonstrated the flimsiness of the doctrine's historical under-
pinnings and agreed with Byse and Davis that legislative reform
is desirable. Jaffe, Judicial Control of Administrative Action
197-98, 213-31, and n. 123 (1965). Milton Carrow, a prolific
writer on administrative law subjects, concludes that "The doc-
trine of sovereign immunity has long fulfilled the requirements
for 'full abandonment.' " Carrow, Soveign hnmunity in Admin-
istrative Laiv — A Neiv Diagnosis, 9 J. of Pub. L. 1, 22 (1960).
He quotes Professor Walter Gellhorn as stating that

"today the doctrine may be satisfactory to technicians but not at all to
persons whose main concern is with justice. . . . The trouble with the
sovereign immunity doctrine is that it interferes with consideration of
practical matters, and transforms everything into a play on words."

Professor David Currie, in a recent article, states that "some-
day Congress should . . . make a more rational and more liberal
reconciliation of individual protection and government elbow-
room in suits to enjoin federal ofl^cers than that established by
the benighted Larson decision and its sequels." Currie, The Fed-
eral Courts and the American Law Institute (Part II), 36 U. Chi.
L. Rev. 268, 290 (1969). No scholar, so far as can be ascertained,
has had a good word for sovereign immunity for many years.

This rare unanimity of legal scholarship, however, has not
been echoed in court opinions except for recurrent admissions
that the subject is a confusing one and that it is not "an easy
matter to reconcile all of the decisions of the Court in this class
of cases." See Cunningham v. Macon & Brunswick R.R. Co., 109
U.S. 446, 451 (1883); Brooks v. Dewar, 313 U.S. 354, 359-60
(1941) ; Malone v. Bowdoin, 369 U.S. 643, 646 (1962). Judicial
dissatisfaction with current law was expressed by Judge Brown
in his recent opinion in Gardner v. Harris, 391 F.2d 885 (5th
Cir. 1968), holding reluctantly that sovereign immunity barred
a landowner's claim that a federal officer was wrongfully denying
him access to his land :

"With so much done ... to give the citizen access to a home-based Federal
Court, frequently in cases that involve millions of dollars or which affect
comprehensive programs, the persistence with which the Government
successfully asserts immunity as to property claims . . . [is] unusual.
. . . [T]hat Congress does not ameliorate these hardships appears

210 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES

even more unusual. . . . And not even equity — the King's conscience —
can help." 391 F.2d at 886-87 and n 3.

The Committee on Judicial Review has given careful consider-
ation to the sovereign immunity problem. The Committee decided
to study the problem at one of its early meetings in 1968. During
the summer of 1968 the Committee's consultant interviewed
lawyers in five federal departments that have had considerable
experience with sovereign immunity cases: the Departments of
Justice, Treasury, Agriculture, Interior, and Health, Education
& Welfare. In September 1968 the Committee asked the Depart-
ment of Justice to comment informally on the Byse and Davis
proposals. Helpful memoranda expressing individual rather than
official viewpoints were prepared for the Committee's use by the
Solicitor General and by the Assistant Attorneys General in
charge of the Civil Division and the Land & Natural Resources
Division. Later in 1968 the Committee consultant prepared a
memorandum on sovereign immunity for the Committee. An-
other memorandum on the subject, prepared by Professor Davis
for an American Bar Association committee, was also made avail-
able to the Committee. On December 13, 1968, the chief legal of-
ficers of six federal departments (Treasury, Defense, Post Office,
Agriculture, Interior, and Health, Education & Welfare) were
asked to comment on a specific legislative proposal. Informal re-
sponses were received from four of the six departments. In May
and July of 1969 the Committee submitted its present proposal
(subsequently changed in minor particulars) to the Department
of Justice for advice and comment. Helpful advice and comment
was received from many individual lawyers in the Department
of Justice, from Judge Oscar Davis of the Court of Claims, and
from Professors Byse and Davis. In struggling with matters that
the Committee has found to be difficult and complex, the co-
operation and assistance noted above has proved invaluable. Need-
less to say, none of the individuals or groups listed are responsible
for — nor do they necessarily agree with — the conclusions that
the Committee has reached.

The Committee's recommendation is designed to achieve five
objectives: (1) to eliminate the artificialities, uncertainties, and
occasional injustices of the present case law; (2) to provide a
local remedy for the resolution of land disputes between the
United States and private persons; (3) to allow the United States
to be named as defendant in cases challenging governmental ac-
tion and to bind the United States by the judgment in an action
against an officer when the action challenges official conduct and

REC. 9. SOVEREIGN IMMUNITY 211

the Attorney General has controlled the defense; (4) to retain
present limitations on the availability and scope of judicial re-
view, thus preventing unwarranted judicial interference with
governmental programs; and (5) to retain the present exclusions
on the availability of monetary or alternative relief that are
embodied in such statutes as the Tucker Act and the Federal
Tort Claims Act. Each of these objectives will be considered on
the following pages.

A. Eliminate Artificialities, Uncertainties
and Injustices of Present Law

The ideal of a government under law can be realized only if
persons are provided with an adequate set of judicial remedies
against that government, its officials, and its agencies. Earlier
portions of this report have argued that remedies against the
United States are impeded by the unsatisfactory case law re-
lating to the doctrine of sovereign immunity — law that is con-
fused, illogical, and sometimes leads to unjust results. There is
need for a limited statutory reform that will

"rid the law or sovereign immunity of the artificialities and rationaliza-
tions, particularly those expressed in the Larson case, that have produced
an irreconcilable body of case law and have permitted — indeed perhaps en-
couraged — courts to avoid the difficult task of determining whether, in
light of all the relevant considerations, the purposes of the applicable
substantive statute would better be served by granting or by denying ju-
dicial review." Byse, Proposed Reforms in "Nonstatutory" Judicial Re-
view, 75 Harv. L. Rev. 1479, 1525 (1962).

Part (1) of the Committee's recommendation, by prohibiting
dismissal of certain actions on the ground that the action was in
substance against the United States or that the United States was
an indispensable party, withdraws sovereign immunity as a de-
fense in certain actions challenging the legality of federal ad-
ministrative behavior. Suits challenging official action or non-
action, and seeking relief other than money damages, should not
be barred by sovereign immunity. The explicit exclusion of mone-
tary relief makes clear that sovereign immunity is abolished only
in actions for specific relief (injunction, declaratory judgment,
mandatory relief, quiet title, and ejectment). Thus the limitations
on monetary relief contained in the Federal Tort Claims Act,
the Tucker Act or similar statutes are unaffected. The consent
to suit is also limited to claims in federal courts; hence the
United States would remain immune from suit in state courts.
The waiver of immunity extends only to actions challenging the

212 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES

legality of federal action (or non-action) ; it would not extend to
proceedings in which federal officers or agencies are not acting in
their "official capacity or under color of legal authority." This
language is taken from 28 U.S. C. § 1391(e), which would govern
venue and service of process in actions falling within the purview
of the recommendation.

Although the recommendation does not use the term "spe-
cific relief," the principal effect of the amendment will be to cut
off the defense of sovereign immunity in suits for specific relief.
Perhaps ninety percent of the cases affected will be suits for
injunction or declaratory judgment or for both, and perhaps
most of the rest will be suits for relief in the nature of mandamus.
But all other specific relief is covered, including specific per-
formance, quieting title, ejectment and habeas corpus. All forms
of monetary relief, however, are excluded from the recommenda-
tion.

The recommendation is cast in the form of an amendment to
the judicial review provisions of the Administrative Procedure
Act, 5 U.S.C. §§ 701-706, rather than as an amendment to
Chapter 161 of the Judicial Code, 28 U.S.C, which is concerned
with actions in which the United States is a party. This choice
limits the effect of the recommendation in important respects :

First, an APA amendment is subject to the exceptions con-
tained in 5 U.S.C. § 701, as well as the exclusions specified in a
number of other statutes. The § 701 exceptions include the Con-
gress, the federal courts, territorial governments. District of
Columbia government, labor mediation boards, certain military
functions, and certain wartime and emergency functions. Other
statutes that contain provisions exempting a function from the
judicial review sections of the APA include the following: export
of scarce materials (50 App. U.S.C. § 2027) ; selective service
proceedings (50 App. U.S.C. § 463(b)); employment and dis-
charge of National Security Agency personnel (50 U.S.C. § 835) ;
renegotiation of defense contracts (50 App. U.S.C. § 1221) ;
certain mine inspection functions (30 U.S.C. § 483) ; and certain
water resource land acquisition functions (33 U.S.C. § 597). The
question is whether these indications of congressional desire to
foreclose judicial review should be fully respected or whether the
abolition of sovereign immunity should be used as a vehicle for
providing specific relief in situations in which Congress has
placed a function outside of the provisions of the APA (assuming
that no other barrier to specific relief exists). The Committee's
view is that the category of reviewable action should not be

REC. 9. SOVEREIGN IMMUNITY 213

broadened in this manner. Retention of the APA exceptions,
unless and until they are abandoned as a general matter, is more
consistent with the nai-row purposes of our proposal.

Incorporation of the reform proposal in the judicial review
provisions of the APA has a second advantage. As is evident from
prior discussion, abolition of sovereign immunity cannot be con-
sidered except in relation to the general law governing the avail-
ability and scope of judicial review. That law is now codified in
5 U.S.C. §§ 701-06; and incorporating the abolition of sovereign
immunity in §§ 702 and 703 draws on the broader context. The
whole matter, for example, is clearly subject to the prefatory
language of §701 (a), "except to the extent that — (1) statutes
preclude judicial review; or (2) agency action is committed to
agency discretion by law." The same conclusion would probably
be reached in any event, but the APA context lends clarity to
the limited nature of the proposal.

The only valid office served by sovereign immunity — prevent-
ing undue judicial interference with governmental programs that
should not be subjected to judicial review — would be performed
by the more discriminating and intelligible doctrines governing
the availability of judicial review, especially the nonreviewability
of action expressly or impliedly precluded from review or com-
mitted to agency discretion, and by the equitable considerations
that control the grant of specific relief.

An argument occasionally made in defense of sovereign im-
munity is that it has been so undermined by the suit against
the officer that, except in cases involving treasury liability for
damages or the disposition of government property — cases per-
haps deserving of special treatment — it no longer serves as a
barrier to judicial review. It is true that lawyers and judges
who have had considerable experience with sovereign immunity
usually have little difficulty in sidestepping sovereign immunity
in situations in which governmental regulatory or enforcement
activity is challenged. These lawyers read Larson narrowly as
essentially concerned with the forced disposition of property
held by the Government where the particular conduct of of-
ficial, though it may be tortious or wrongful toward the private
claimant, is authorized by the statute. So read, Larson does not
stand in the way of the suit against an officer engaged in a regu-
latory or enforcement activity not involving government prop-
erty, where the claim is that the officer is acting unlawfully.

This narrow reading of Larson, even if correct, is by no means
universally accepted. In part II of this report some of the many

214 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES

cases in which the broader Larson formulations have led lower
courts astray were discussed. Narrower and more refined formu-
lations are necessary; and legislation is probably required to do
the job.

It should be emphasized that the application of the artificial-
ities of Larson is not restricted to cases involving government
property or funds. The cases discussed on pp. 11-12, supra, in-
volve regulatory matters, not government property or funds. A
partial sampling of recent cases reveals that sovereign immunity
has been a serious issue in numerous suits challenging govern-
ment regulatory and enforcement activity:

Agriculture regulation: Garvey v. Freeman, 263 F.Supp. 573 (D.
Colo. 1967), aff'd 397 F.2d 600 (10th Cir. 1968) (sovereign immunity did
not bar judicial review of determination of normal wheat yields per
acre) ; Gregory v. Freeman, 261 F.Supp. 362 (N.D.N.Y. 1966) (sovereign
immunity barred claim that officials had erred in determining that peti-
tioner was not in compliance with feed grain program) ; Moon v. Free-
man, 245 F.Supp 837 (E.D.Wash. 1965), aff'd on other grounds, 379 F.2d
382 (9th Cir. 1962) (Sovereign immunity barred suit by wheat proc-
essors to enjoin wheat marketing export program to recover funds al-
ready paid).

Food and drug regulations : American Dietaids Co., Inc. v. Celebreeze,
317 F.2d 658 (2d Cir. 1963) (sovereign immunity barred action to re-
cover tapes of a concealed tape recorder used by FDA inspectors during
an inspection); Durovic v. Palmer, CCH FDC Law Reports ^ 40,099
(N.D.Ill.), aff'd on other grounds, 342 F.2d 634 (7th Cir. 1965) (sover-
eign immunity barred suit to enjoin FDA inspection of facility produc-
ing Krebiozen) ; Toilet Goods Ass'n, Inc. v. Gardner, 360 F. 2d 677, 683
(2d Cir. 1966), aff'd on other grounds, 387 U.S. 158 (1967) (sovereign
immunity does not bar a pre-enforcement challenge by domestic manu-
facturers of FDA color additive regulations) ; Sugarman v. Forbragd,
267 F.Supp. 817 (N.D.Cal. 1967) (sovereign immunity barred challenge
of FDA determination that coffee beans could not be imported).

Administration of federal grant-in-aid programs: Lee County School
Dist. No. 1 V. Gardner, 263 F.Supp. 26 (D.S.C. 1967) (sovereign immu-
nity did not bar challenge of HEW deferral of payment of federal funds
to school district) ; Dermott Special School District v. Gardner, 278
F.Supp. 687 (E.D.Ark. 1968) (sovereign immunity did not bar school dis-
trict's challenge of HEW guidelines establishing requirements for feder-
ally aided programs) . Cf . Congress of Racial Equality v. Social Security
Administration 270 F.Supp. 537 (D.Md. 1967) (suit to require agency
to establish an admininstrative procedure pursuant to an executive order
concerning equal opportunity in federal employment barred by sovereign
immunity) .

Subversive activities: Kennedy v. Rabinowitz, 318 F.2d 181 (D.C. Cir.
1963), aff'd on other grounds, 376 U.S. 605 (1964) (sovereign immunity
barred action by attorneys representing Cuba for a declaration that For-
eign Agents Registration Act did not require them to register) ; In-

REC. 9. SOVEREIGN IMMUNITY 215

dust rial Workers of World v. Clark, 385 F.2d 687 (D.C. Cir. 1967) (sov-
ereign immunity did not bar organization's challenge to its listing in
"Attorney General's List").

Enforcement of Fair Labor Standards Act: Wohl Shoe Co. v. Wirtz,
246 F.Supp. 821 (E.D.Mo. 1965) (sovereign immunity barred action
seeking a declaration that employer, warned by officers that it was vio-
lating the Act, was within designated exemptions) ; Capital Coal Sales v.
Mitchell, 164 F.Supp. 161 (D.D.C. 1958), aff'd 282 F.2d 486 (D.C. Cir.
1960) (sovereign immunity did not bar challenge of blacklisting of gov-
ernment contractor for alleged violation of Walsh-Healey Act) ; Rogers
V. Skinner, 201 F.2d 521 (5th Cir. 1953) (sovereign immunity barred
action to determine whether plaintiff's employees were covered by
FLSA) ; Interstate Reclamation Bureau v. Rogers, 103 F.Supp. 205
(S.D.Tex. 1952) (same).

Government employment: Leber v. Canal Zone Central Labor Union,
383 F.2d 110 (5th Cir. 1967), rev'g 246 F.Supp. 998 (D.Canal Zone
1965) (attack on regulations decreasing overseas differential pay barred
by sovereign immunity) ; Manhattan-Bronx Postal Union v. Gronouski,
350 F.2d 451 (D.C. Cir. 1965) (sovereign immunity barred suit challeng-
ing Postmaster General's refusal to recognize the plaintiff union as ex-
clusive bargaining representative of certain postal employees) ; Mulry v.
Driver, 366 F.2d 544 (9th Cir. 1966) (validity of Veteran Administra-
tion regulation prohibiting physicians, dentists and nurses from engag-
ing in outside practice; since regulation was authorized, sovereign im-
munity barred suit). See also American Guaranty Corp. v. Burton, 380
F.2d 789 (1st Cir. 1967) (sovereign immunity barred a challenge of the
validity of a regulation fixing the fees for salaries and expenses of refer-
ees in bankruptcy) .

Parcel post rates: Doehla Greeting Cards, Inc. v. Summerfield, 227
F.2d 44 (D.C. Cir. 1955) (sovereign immunity barred challenge of
validity of increased parcel post rates) ; Summerfield v. Parcel Post As-
sociation, 280 F.2d 673 (D.C. Cir. 1960) (same).

Tax investigations: ReisTnan v. Caplin, 317 F.2d 123 (D.C. Cir. 1963),
aff'd on other grounds, 375 U.S. 440 (1964) (sovereign immunity barred
suit by taxpayer's attorneys seeking injunctive and declaratory relief
from an IRS summons calling for production of allegedly privileged mat-
ter, including the workproduct of the attorneys) ; Balistrieri v. Ujiited
States, 303 F.2d 617 (7th Cir. 1962) (sovereign immunity barred tax-
payer from obtaining a declaration that he was entitled to examine docu-
ments relevant to tax liability which IRS had subpoenaed from an
accountant) ; Smith v. United States, 250 F.Supp. 803 (D.N.J. 1966)
(sovereign immunity did not bar taxpayer's motion to suppress evidence
obtained from them by IRS agent, allegedly in violation of constitutional
rights).

The catalog above is an illustrative rather than exhaustive
list of recent regulatory and enforcement cases in v^^hich the
government has urged dismissal — often successfully — on sover-
eign immunity grounds. Cases in other fields, involving such
matters as rural electrification loans, welfare benefits, federal
alcohol regulation, correction of military records, and a number

216 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES

of other subjects, might also be cited. Indeed, the Department of
Justice appears to assert sovereign immunity, usually as one of
a number of grounds for dismissal of the plaintiff's complaint,
in a substantial portion of the cases involving nonstatutory re-
view of federal administrative action. Only if tradition or hold-
ings make it clear that the suit against the officer is an appro-
priate form of judicial revievi^, as in the case of Post Office fraud
orders, is the defense not asserted. This practice was recently
criticized by Judge Friendly in Toilet Goods Ass'n v. Gardner,
360 F.2d 677, 683 n. 6 (2d Cir. 1966), aff'd 387 U.S. 158 (1967) :

"[The Government makes] the surprising contention that an action for
declaration that federal regulatory officers have acted in excess of their
authority constitutes an uncontested suit against the United States. . . .
[L]aw officers of the Government ought not to take up the time of
busy judges or of opposing parties by advancing an argument so plainly
foreclosed by Supreme Court decisions."

One wonders whether the confusion in the case law does not lead
district judges, less familiar with the intricacies of nonstatutory
judicial review than Judge Friendly, to deny a hearing on the
merits to some litigants who should receive it.

No claim is made, of course, that each of the cases in which
sovereign immunity has been invoked reached an unjust result.
Alternative grounds for dismissal were mentioned or were present
in many of these cases; and it is likely that the government
would have prevailed in most of the cases if the merits had
been reached. But it cannot be asserted with confidence that all
of the results were just; some meritorious claims may have
been rejected out-of-hand by dismissals based on sovereign im-
munity grounds.

It is time to reassert the fundamental proposition stated in
United States v. Lee, 106 U.S. 196, 220 (1882) :

"Courts of justice are established, not only to decide upon controverted
rights of the citizens as against each other, but also upon rights in con-
troversy betvi^een them and the government. . . ."

B. Provide Specific Relief in Cases Involving Public Land

Sovereign immunity has played a large role in cases involving
the use or disposition of land claimed by the United States.
The Committee's recommendation is intended to provide a local
judicial remedy in two related but distinct situations: (1)
judicial review of administrative determinations involving public
land questions; and (2) property disputes between the United
States and private persons.

REC. 9. SOVEREIGN IMMUNITY 217

1. Judicial review of admiyiistrative determinations in the
public land field. Unlike more recently created administrative
agencies, the older administrative activity involved in the
use or disposition of public lands is not subject, vv^ith rare ex-
ceptions, to specific statutory review provisions. Consequently, a
litigant challenging an administrative determination in the public
land field is required to seek "nonstatutory" review under the
general law governing the federal judicial system. In order to
avoid the sovereign immunity doctrine, the suit must be brought
against the official rather than against the government itself by
name. But even that may not suffice when the judgment sought
would directly provide for the disposition of government prop-
erty. Larson v. Domestic & Foreign Commerce Corp., 337 U.S.
682 (1949). A literal application of this prohibition would fore-
close all suits against public land officials, a result that would be
unjust as well as inconsistent with a long history of limited
judicial review in the public land area. See, e.g., West Coast Ex-
ploration Co. V. McKay, 213 F.2d 582 (D.C. Cir. 1954) ; Clackamas
County V. McKay, 219 F.2d 479 (D.C. Cir. 1954), vacated as
moot, 349 U.S. 909 (1955), The absence of statutory review pro-
visions also has created pressure to view § 10 of the Adminis-
trative Procedure Act as a jurisdictional provision and as a con-
sent to suit. Adams v. Witmer, 271 F.2d 29 (9th Cir. 1959). The
result is a great deal of confusion. A recent study of "Adminis-
trative Procedures and the Public Lands," prepared for the Public
Land Law Review Commission by a group of scholars headed
by Professor McFarland of the University of Virginia, stated
that:

". . . suits in the nature of review actions [against public land officials]
often have been permitted. . . . When they are permitted notwithstand-
ing, and when forbidden because of, the sovereign immunity doctrine is
admittedly difficult if not impossible to determine on the basis of the
court opinions. . . . [T]he precedents baffle lawyers, tempt government
counsel, and feed the despair of commentators." [Pp. 187-88. Footnotes
omitted. Footnote 279 adds that "Despite Larson ... no pulbic land case
of the traditional type has been decided by the Supreme Court on the
basis of sovereign immunity."]

The study concludes that "a simple statutory affirmation of the
right to court review would seem to be a dire necessity and
should pose no threat to legitimate public land administration."
(P. 305.) The report cautions that "because court review is
severely limited at best," under the general law of judicial re-
view codified in the Administrative Procedure Act, abolition of
sovereign immunity will not be "disruptive, costly, and time con-

218 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES

suming in operation. But it could operate to firm up admin-
istrative procedures, instill confidence in those who have or seek
rights to develop public land resources, and afford at least a
theoretical protection for the small operator who traditionally
has difl^culty in dealing with oflicialdom." (Pp. 305-06.)

Although the Public Land Law Review Commission will not
submit its final report until mid-1970, there is every indication
that the Commission will accept the recommendations of its
study staff. The Committee's recommendation will effectuate this
highly desirable reform.

2. Property disputes between the United States and private
persons. Federal law does not contain any general provision
authorizing quiet title suits involving land claimed by the United
States. In the absence of such a provision, attempts to obtain
specific relief against the federal ofl^cer in possession of disputed
land have foundered on the sovereign immunity doctrine. Malone
V. Bowdoin, 369 U.S. 643 (1962), discussed extensively at pp.
15-18, supra, invoking sovereign immunity to bar a suit to try
title, denies specific relief to the private landowner, leaving him
a damage remedy for an unconstitutional "taking" under the
Tucker Act.

The Committee believes that specific relief (injunction or dec-
laratory judgment) is appropriate in these land dispute cases.
The uniqueness of land is a factor favoring specific relief and
distinguishing this situation from other property situations (the
coal involved in the Larson case had no unique or unusual qual-
ities; hence money damages was a totally adequate remedy). The
nonstatutory suit for specific relief may be brought in the dis-
trict court where the land is located, 28 U.S.C. § 1391(e), pro-
viding the landowner with an easily accessible and inexpensive
local forum (the Court of Claims has exclusive jurisdiction of
the claim for money damages if the value of the property ex-
ceeds $10,000). The issues likely to be involved in these cases, a
blend of state land law and federal statutory law, are peculiarly
appropriate for judicial determination.

Moreover, the government should adhere to prescribed proc-
cesses of decision-making in exercising, whether in form or sub-
stance, the power of eminent domain. In some situations, such as
that involved in Simons v. Vi7ison, 394 F.2d 732 (5th Cir. 1968),
in which sovereign immunity was held to bar a claim of accreted
land formed along a river which divided land owned by the
United States from that of the plaintiffs', eminent domain may
be inapplicable because no public use could be shown— appar-

REC. 9. SOVEREIGN IMMUNITY 219

ently the government's only purpose was to collect royalties from
oil produced on the disputed land. In other cases, such as Malone
itself or Gardner v. Harris, 391 F.2d 885 (5th Cir. 1968), where
the disputed land was part of a larger parcel devoted to a public
purpose, eminent domain is available if the land found to belong
to the claimant is desired by the United States. Is it too much
to ask that condemnation of private land be accomplished in ac-
cordance with the policies and procedures established by Con-
gress, rather than by the unilateral decision of a government of-
ficer, perhaps a subordinate one, in claiming the land or taking
possession of it?

A partial abolition of sovereign immunity would open the door
to suits for injunctive or declaratory relief in land dispute cases,
at least in situations where the plaintiff frames his complaint
so as to meet federal-question requirements (enjoining what
would otherwise be an unconstitutional taking of private prop-
erty). See White v. Sparkhill Realty Corp., 280 U.S. 500 (1930),
stating that a suit to enjoin unconstitutional conduct comes with-
in the federal-question jurisdiction but an ejectment complaint,
"without anticipating possible defenses, would not present a case
arising under the Constitution or a treaty or law of the United
States." Because of jurisdictional problems (even suits stating a
federal question would need to satisfy the $10,000 minimum jur-
isdictional amount of 28 U.S.C. § 1331) and because some pro-
cedural aspects of quiet title suits deserve special treatment, an
amendment to the Judicial Code authorizing quiet title proceed-
ings in federal district courts to resolve land disputes between
the United States and private persons is probably desirable in
addition to the recommendation proposed at this time.

The Committee has encountered little opposition to its view
that federal courts should be authorized to resolve land disputes
involving the United States. The McFarland report to the Public
Land Law Review Commission, for example, stated that "There
seems to be somewhat general agreement that there should be
statutory provision for suits to try title. . . ." (P. 305.) There
is gamesmanship involved in getting federal officials to take the
initiative in bringing court suits — the only present method of
circumventing sovereign immunity. Sometimes government law-
yers are unwilling to take this step merely because they do not
want to shoulder the plaintiff's burdens ; the ability of the private
claimant to initiate suit would remedy that problem. Remedial
legislation on this subject has been drafted by the Department

220 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES

of Justice but has thus far not received priority on the de-
partment's legislative program.

C. Alloiv the United States To Be Named as Defendant in Cases
Challenging Government Action

Actions challenging official conduct are intrinsically against
the United States. Clarity is served by allowing the plaintiff to
name the United States as a defendant in such actions. Part (1)
of the recommendation withdraws the defense of sovereign im-
munity in actions not seeking monetary relief in which the
legality of federal administrative action is challenged. The plain-
tiff is permitted but not required to name the United States a
defendant.

Moreover, the recommendation provides that "judgment or
decree may be entered against the United States whether or not
the United States is named as a defendant" in an action of the
type permitted by the recommendation. When the Attorney Gen-
eral or other authorized legal officers of the United States defend
an officer or agency acting in his official capacity or under color
of legal authority, the United States should be bound by the re-
sulting judgment or decree to the extent that and in the manner
that it would be if it had been named as a party.

Part (2) of the Committee's recommendation allows a non-
statutory review action to be brought "against the United States,
the agency by its official title, or the appropriate officer" In-
sertion of this sentence in 5 U.S.C. §703, dealing with the
"form and venue of [review] proceedings makes it clear that
the form and venue of existing statutory review proceedings is
unaffected. Thus if a "special statutory review proceeding" pro-
vides for exclusive jurisdiction in a particular court, a form of
proceeding, and special venue, such provisions must be complied
with. Only if no special statutory review proceeding is appli-
cable may a nonstatutory review proceeding be brought "against
the United States, the agency by its official title, or the ap-
propriate officer."

There are three reasons for allowing the United States to be
named as defendant in nonstatutory review actions: (1) to avoid
the frictional subtleties of the suit against the officer; (2) to
eliminate the possibility that an otherwise meritorious claim
could be defeated on the technicality that a wrong defendant was
named; and (3) to insure that the resulting judgment is binding
on the United States.

1. Fictional character of the suit against the officer. The suit

REC. 9. SOVEREIGN IMMUNITY 221

against the officer, challenging his official conduct, served a useful
purpose as a device for circumventing the sovereign immunity
doctrine. Once sovereign immunity is tamed, however, requiring
the plaintiff to cast his suit in the form of a suit against the
officer performs no useful function. The fictional character of
the suit against the officer is merely misleading and deceptive.
Everyone recognizes that the suit is in fact against the United
States, or one of its agencies, and involves the legality of govern-
mental action.^

2. Technicalities of the law of parties defendant. Requiring
the plaintiff to sue an officer, when everyone recognizes that the
action is against the United States, perpetuates some troublesome
technicalities of the law of parties defendant. Even though Rule
25(d) of the Federal Rules of Civil Procedure provides that
"When a public officer sues or is sued in his official capacity, he
may be described as a party by his official title rather than by
name," courts occasionally dismiss because the wrong officer was
named, other officers were not joined, or service of process was
made on an agency i-ather than the officer. See, e.g., Congress of
Racial Equality v. Commissioner, 270 F.Supp. 537, 542 (D.Md.
1967) (action against the chairman of the Civil Service Commis-
sion dismissed because the other commissioners were indispens-
able parties) ; Bell v. Groak, 371 F.2d 202 (7th Cir. 1966) (service
made on Commission rather than upon e:ach commissioner). Al-
lowing the plaintiff to sue the officer, the agency by name, or
the United States should eliminate decisions on such technical
procedural grounds. If the plaintiff names the United States as
defendant, process would be served in accordance with Rule 4(d)
(4) of the Federal Rules of Civil Procedure — by delivery to the
United States attorney for the district in which the action is
brought, with a copy mailed to the Attorney General, and "in
any action attacking the validity of an officer or agency of the
United States not made a party, by also sending a copy of the
summons and of the complaint by registered mail to such officer
or agency."

* The essentially nonpersonal nature of the nonstatutory review action is ronognizetl explicitly
in connection with the "substitution" of successors where a defendant official "sued in his
official capacity" dies or resigns. At the trial level since 1961 "his successor is automatically
substituted as a party" and "he may be described as a party by his official title rather than by
name." Rule 2o(d), Federal Rules of Civil Procedure; and see also the similar Rules 48(a) and
(4) of the Supreme Court Rules and Rule 43(c) of the Federal Rules of Appellate Procedure
for the Courts of Appeals. Although the rule speaks in terms of public officials sued in their
"official capacity," the Notes of the Advisory Committee on Rules concerning the basic 1961 Rule
describe it as one applicable "to any action brought in form against a named officer, but
intrinsically against the government or the office or the incumbent thereof," and state that it is
designed to "encourage the use of the official title without any mention of the officer individually,
thereby recognizing the intrinsic character of the action."

222 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES

3. Binding effect of judgments. The theory of the officer's suit
is that the officer, by acting unconstitutionally or in excess of his
authority, is no longer acting in his official capacity, and hence
may be enjoined in his personal capacity. This fiction allowed
circumvention of sovereign immunity, but raised questions con-
cerning the binding effect of the judgment on the United States,
which was not and could not be made a party. A long line of
cases states the rule that the United States is not bound by a
judgment in an unconsented m personam action against one of
its officers. See Carr v. United States, 98 U.S. 433 (1878) ;
Hussey v. United States, 222 U.S. 88 (1911); Sunshine Coal
Co. V. Adkijis, 310 U.S. 381, 402-03 (1940) ; but cf. United States
V. Candelaria, 271 U.S. 432, 444 (1926) (United States bound by
a judgment when its lawyers controlled the litigation). Moreover,
sovereign immunity is an objection that is available on collateral
attack even if government lawyers did not raise it in an earlier
proceeding. United States v. United States Fidelity & Guarantee
Co., 309 U.S. 506 (1940). Government counsel now ordinarily de-
fend even personal actions against federal officers arising out of
their official duties. It is unconscionable that the United States
not be precluded by a judgment in a litigation in which its
interests are involved and in which it has controlled the defense.
The recommendation, by providing that "a judgment or decree
may be entered against the United States whether or not the
United States has been named a defendant" draws on general
principles of res judicata and insures that the United States will
be bound by the judgment when it has controlled the defense in
a suit against an officer.

D. Law Other Than Sovereign Immunity Unchanged

The Committee's recommendation, after forthrightly abolish-
ing sovereign immunity as a defense in nonstatutory review ac-
tions, provides that

"Noting herein (1) affects other limitations on judicial review or the
power or duty of the court to dismiss any action or deny relief on any
other appropriate legal or equitable ground; . . . ."

This important protective language insures that the abolition
of sovereign immunity will not result in undue judicial interfer-
ence with governmental operations or a flood of burdensome
litigation. Grounds for dismissal or denial of relief under present
law include but are not limited to :

(1) The plaintiff's lack of standing {e.g., Perkins v. Lukens

REC. 9. SOVEREIGN IMMUNITY 228

Steel Co., 310 U.S. 113 (1940); Pennsylvania R. Co. v. Dillion,
335F.2d292 (D.C. Cir. 1964)).

(2) The absence of a matured controversy (e.g., Internationxil
Longshoremen's Union v. Boyd, 347 U.S. 222 (1954) ) .

(3) The availability of an alternative remedy in another court
{e.g., American President Lines, Ltd. v. Federal Maritime Board,
235F.2dl8 (D.C. Cir. 1956)).

(4) The express or implied statutory preclusion of judicial
review {e.g., Schilling v. Rogers, 363 U.S. 666 (1960) (implied
preclusion) ; Barefield v. Byrd, 320 F.2d 455 (5th Cir. 1963)
(express preclusion) ) .

(5) The commission of the matter by law to the defendant's
discretion {e.g., Panama Canal Co. v. Grace Line, Inc., 356 U.S.
309 (1958)).

(6) The privileged nature of the defendant's conduct {e.g.,
Barr v. Matteo, 360 U.S. 564 (1959); United States v. Reyn-
olds, S45V.S. 1 (1953)).

(7) The plaintiff's failure to exhaust his administrative rem-
edies {e.g., Myers v. Bethlehem Shipbuilding Corp., 303 U.S.
41 (1938)).

(8) The discretionary authority of a court to refuse relief
on equitable grounds {e.g., Morrison v. Work, 266 U.S. 481, 490
(1925)).

As Professor Byse has commented :

"None of these principles is precise or self-executing, and it is not diffi-
cult to criticize the manner in which they have been applied in some
instances. But unlike the sovereign immunity doctrine, they require or at
least tend to require the court to direct attention to the considerations
that are relevant to the question whether the action should be reviewed."'
Rather than being able to rely upon the conceptualism of the Larson
case or upon other 'empty fictions which have thus far largely controlled
the application of the sovereign immunity doctrine in suits against gov-
ernment officers,' the court would be forced to consider — and hopefully to

"' "If, for example, the Larson case . . . had been decided under [a proposed statute
abolishing sovereign immunity], the action could not have been dismissed on the ground that it
was against the United States, or that the United States was an indispensable party. But the
action might have been dismissed on the ground (1) that the plaintiff had an adequate legal
remedy for money damages under the Tucker Act, or (2) that to allow suits for specific
performance of contracts that are part of a national program to dispose of surplus war goods
would constitute an unwarranted disruption of the government's sales program, or (3) that the
statute in question gave the War Assets Administrator authority to make erroneous as well as
correct determinations. Deciding the Larson case on any of these grounds would require the
court to direct attention precisely to the considerations which are relevant to the issue whether
the administrative action should be reviewed by the court. If the court should conclude (1)
that the plaintiff did not have adetiuate legal remedy and (2) that specific performance of
the contract would not unduly interfere with the program to dispose of surplus war supplies
and (3) that the Administrator's authority did not extend to making erroneous decisions, I
cannot see that any sound policy would be served by refusal to adjudicate the plaintiff's
contentions."

224 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES

articulate in its opinion — precisely why relief should be granted or
denied. Such a process not only should result in more intelligent decisions
but should provide the profession with sounder bases for prediction and
constructive criticism than are possible in the present morass.

"Although I cannot pretend to an encyclopedic knowledge of govern-
mental regulation or to the prescience needed to foretell judicial reaction
to ingenious efforts of resourceful counsel to extend any statute to its
utmost, I am confident that the various doctrines and principles that gov-
ern the availability of judicial review are sufficiently comprehensive and
flexible to prevent an undue increase in the availability of judicial review
and to avoid improper judicial interference with federal regulatory
action. . . ." Byse, Proposed Reforms m "Nonstatutory" Judicial Review,
75 Harv. L. Rev. 1479, 1529-30 (1962).

Special doctrines favoring the United States as a plaintiff are
unaffected by the Committee's recommendation. The exemption
of the United States from statutes of limitations is not based on
sovereign immunity but on the separate ground that the public
interest should not suffer because of the negligence of public
officers. United States v. Summerlin , 310 U.S. 414 (1940). More-
over, the Committee's recommendation is applicable to situations
in which the action is against the United States, not to those in
which the United States is a plaintiff.

Nor does the Committee's recommendation affect the long-
standing immunity of the United States from garnishment proc-
ess. FHA V. Burr, 309 U.S. 242 (1940). In these cases, in
which an employee of the United States allegedly owes money
to a creditor, who attempts by means of state garnishment proc-
ess to reach wages due the employee from the United States,
the action does not involve a claim that "an agency or an officer
or employee thereof acted or failed to act in an official capacity
or under color of legal authority." Moreover, the action seeks
money relief.

Government lawyers who have expressed opposition to an ab-
olition of sovereign immunity fear that two harmful consequences
may result: (1) undue judicial interference with governmental
programs; and (2) a flood of burdensome litigation causing ex-
pense and inconvenience to the government. Although complete
assurance on each of these matters is impossible, the Committee
has reasons to believe that these in terrorem consequences will
not result from an adoption of its proposal.

1. Undue judicial interference ivith governmental 'programs?
It must be borne in the mind that the sovereign immunity doc-
trine became established about one hundred years ago, long be-
fore the modern law of judicial review had developed. The courts
at that time assumed that they must choose between performing

REC. 9. SOVEREIGN IMMUNITY 225

executive tasks and refusing review; it was understandable that
they took the latter coui-se. With the development in the twentieth
century of a sophisticated body of law governing the availability,
scope and limits of judicial review, this choice is no longer
presented. American experience amply demonstrates that a limit-
ed judicial review of governmental actions produces fairer ad-
ministrative procedures, sounder substantive results, and better
government.

The essential and sound policy underlying sovereign immunity —
that courts should not engage in indiscriminate interference
with governmental programs — is not abandoned merely because
an artificial and outmoded doctrine is abolished. The same basic
policy is inherent in the body of law that governs the avail-
ability and scope of judicial review. The doctrine of sovereign
immunity is unnecessary to prevent courts from (a) entering
fields which the Constitution or Congress has delegated to the
executive, and (b) displacing executive or administrative judg-
ment.

The Committee's recommendation is an amendment to the Ad-
ministrative Procedure Act; and its clear language retains the
existing limitations on the availability of judicial review. Section
10 of the APA, now 5 U.S.C. § 701, provides that "This chapter
applies . . . except to the extent that — (a) statutes preclude
judicial review; or (2) agency action is committed to agency
discretion by law." Sovereign immunity and unreviewability are
two separate ideas; and unreviewability is clearly retained. Thus
it is fanciful to suppose that abolition of sovereign immunity will
allow the courts to decide issues about foreign afi'airs, military
policy, and other subjects inappropriate for judicial action. Courts
are not unaware of their capabilities and limits; much of the
law of unreviewability consists of marking out areas in which
legislative action or traditional practice indicate that courts are
unqualified or that issues are inappropriate for judicial deter-
mination.

Several recent cases provide illustrations. In Luftig v.
McNamara, 373 F.2d 664 (D.C. Cir. 1967), a serviceman sought to
enjoin the Secretary of Defense from ordering him to Vietnam,
claiming that American military action there was unconstitutional
and illegal. In dismissing the action the court stated :

"It is difficult to think of an area less suited for judicial action than
that into which Appellant would have us intrude. The fundamental divi-
sion of authority and power established by the Constitution precludes
judges from overseeing the conduct of foreign policy or the use and dis-

226 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES

position of military power; these matters are plainly the exclusive prov-
ince of Congress and the Executive." 373 F.2d at 665-66.

The sovereign immunity doctrine, briefly mentioned as an al-
ternative ground, was superfluous; the result would be the same
in its absence. Similarly, the closing of a military facility (Arm-
strong V. United States, 354 F.2d 648 (9th Cir. 1965)), the
shift in location of a customs oflfice (Los Angeles Custom and
Freight Brokers Ass'n v. Johnson, 277 F.Supp. 525 (C.D.Calif.
1967)), the discontinuance of a post office (Sergeant v. Fudge,
238 F.2d 916 (6th Cir. 1956)), and the like, are unreviewable
because committed to agency discretion or otherwise inappropriate
for judicial determination.

Similarly, abolition of sovereign immunity will not expose gov-
ernmental programs to indiscriminate judicial interference by
injunction. The result in Dugan v. Rayik, 372 U.S. 609 (1963),
discussed supra at pp. 19-20, would be unaffected by the Com-
mittee proposal. The Court in Dugan interpreted the statutes
under which the reclamation project was proceeding as authoriz-
ing the seizure of private water rights and as confining the
plaintiff to his claim for monetary relief under the Tucker Act.
Monetary relief, the Court held, was intended to be the exclu-
sive remedy.

Where Congress has not expressly or impliedly precluded spe-
cific relief, injunctive relief nevertheless will be denied if harm
to public interests will result from such relief. The Committee's
proposal does not affect the longstanding tradition that an equity
court has to balance the interests of the parties in deciding what
kind of relief is appropriate:

"The court, in its discretion, may refuse ... to give a remedy which
would work public injury or embarrassment . . . just as in sound discre-
tion a court of equity may refuse to enforce or protect legal rights, the
exercise of which may be prejudicial to the public interest." United
States ex rel. Greathouse v. Dern, 289 U.S. 352, 360 (1933).

See also § 10(d) of the APA, now 5 U.S.C. § 705.

It is true that considerable discretion is inescapably vested in
the judiciary, and the possibility of occasional error remains.
But this is an inevitable concomitant of the administration of
any system by human beings. This risk must be weighed against
the injustices and uncertainties resulting from the sovereign im-
munity doctrine. (Of course, error is possible even under the
sovereign immunity doctrine; lower courts in Dugan v. Rank,
372 U.S. 609 (1963), interfered with the administration of the
Central Valley water project for several years, until reversed by

REC. 9. SOVEREIGN IMMUNITY 227

the Supreme Court.) If the fear of improper judicial interference
proves warranted, which seems unlikely, it could be met by a
provision resti-icting temporary or interlocutory relief, pending
a decision on the merits, in those situations in which caution is
most warranted: when the action seeks (a) to compel the pay-
ment of money by the United States, (b) to secure the possession
or enjoyment of property in which the United States is admitted
or found to have a legal or equitable interest, or (c) to require
action to be taken on behalf of the United States which would
involve the expenditure of public funds.

Finally, the argument that abolition of sovereign immunity
would allow judges to substitute their judgment for that of ad-
ministrators overlooks the established limits on the scope of judi-
cial review. Section 10(e) of the APA, now 5 U.S.C. §706,
limits review to such questions as constitutionality, statutory
authority, proper procedure, abuse of discretion, and findings
supported by substantial evidence. The scope of review in a case
formerly kept out of court by sovereign immunity will be the
same as the scope of review in a case that has always been re-
viewable. Substitution of judgment, de novo consideration, and
the like, are not permitted.

The Committee considered but rejected proposals that attempted
to state considerations governing the grant of specific relief.
The factors involved are so numerous and their application so
dependent upon the circumstances of individual cases that the
attempt to spell them out is an exceedingly difl^icult task. It
is, moreover, a hazardous one, since any attempt to restate
a complex body of law creates problems while attempting to
solve them. Language suggesting that the law of judicial re-
view is being changed in one direction or another is almost im-
possible to avoid; and any partial restatement of relevant factors
creates negative implications with respect to factors or doctrines
that are omitted. Thus the Committee concluded that it was
wiser to withdraw the defense of sovereign immunity in cer-
tain situations in which its application is inappropriate, leaving
all other law unrestated and unchanged.

2. Inconvenience to the government from burdensome litiga-
tion? Some government lawyers, defending the sovereign immu-
nity doctrine, assert that it prevents a flood of litigation from
overwhelming federal courts and government legal staffs. They
point to the large number of "crackpot" suits which are filed
against the United States and its agencies; and the value of
sovereign immunity as a device for getting rid of these cases

228 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES

at the threshold, without the inconvenience and expense of a
defense on the merits. "Crackpot" suits, however, have deficien-
cies other than that they are directed against the United States
or its oflficers. In nearly every such case there will be other
grounds for dismissal on the pleadings (most often because
the plaintiff lacks standing, because the issue is inappropriate
for judicial determination, because the action is committed to
agency discretion or precluded from review, or because the com-
plaint fails to state a claim for relief). In nearly every case
government lawyers assert a battery of defenses and objections,
of which sovereign immunity is only one. If no other defense or
objection exists, one suspects that the suit is not properly classi-
fied as a "crank" suit and that consideration of the merits is
desirable.

The "floodgates" argument is always a difficult one to rebut
in advance, but fears of this kind tend to be exaggerated. The
doctrine of sovereign immunity is so riddled with exceptions that
a large increase in the volume of litigation seems unlikely. The
experience of those agencies that are now fully subject to judicial
review under statutory review provisions suggests that the level
of litigation is not crippling or burdensome, and that judicial
review has many advantages, even from the agency's point of
view. The heavy expense of litigation also serves as a pragmatic
limit on the volume of cases. Other limiting doctrines, already
discussed, will allow a threshhold disposition of unmeritorious
cases. In the final analysis, if some additional cases do reach the
merits because of the curtailment of sovereign immunity, the
additional burden on government lawyers must be justified on
the same basis as judicial review in general — the desirability
of a judicial determination of the legality of official action.

E. Retain Preseyit Exclusions on the Availability of Monetary

or Alternative Relief

The Committee's recommendation is phrased as not to eff'ect
an implied repeal or amendment of any prohibition, limitation,
or restriction of review contained in existing statutes, such as
the Court of Claims Act, 28 U.S.C. § 1491, the Tucker Act, 28
U.S.C. § 1346(a) (2), or the Federal Tort Claims Act, 28 U.S.C.
§§ 1346(b), 1402(b), 1504, 2110, 2401, 2402, 2411, 2412, 2671-
80, in which Congress has conditionally consented to suit. While
this result would probably have been reached by the preservation
of all other "legal or equitable grounds [s]" for dismissal, which
include the designation by Congress of an exclusive remedy or

REC. 9. SOVEREIGN IMMUNITY 229

method of i-eview, clause (2) of the final sentence of part (1)
of the recommendation is intended to prevent any question on
this matter from arising. It states unequivocally that

"Noting herein . . . (2) confers authority to grant relief if any other
statute that grants consent to suit expressly or impliedly forbids the
relief which is sought."

As the earlier discussion has indicated, the purpose of the
Committee's recommendation is to provide nonstatutory review
in some situations in which the doctrine of sovereign immunity
now stands in the way. The creation of new substantive damage
claims is not within the sphere of our concern ; only a latitu-
dinarian view of "judicial review" would consider monetary re-
lief against the United States, primarily designed to compensate
for harms done, as part of judicial review of administrative ac-
tion, which is the subject of § 10 of the APA. However that may
be, the language of our proposal, which is applicable in terms
only to actions "seeking relief other than money damages," in-
dicates that sovereign immunity remains as a defense to actions
seeking monetary relief. Existing law governing money damages
in tort and contract actions is left unchanged. Thus the exceptions
from liability contained in the Federal Tort Claims Act, 28 U.S.C.
§ 2680, such as the exclusion of most intentional torts and
activities involving "a discretionary function," remain unaffected
by the Committee's proposal.

Similarly, in situations in which the statute consenting to
monetary relief expressly or impliedly precludes an alternative
remedy, such as the Court of Claims Act, 28 U.S.C. § 1491, and
the Tucker Act, 28 U.S.C. § 1346(a) (2), suits for specific relief
would continue to be barred, as those statutes by expressly con-
senting to certain actions for money judgments impliedly pro-
hibit actions seeking other relief. Special statutory remedies hav-
ing the same character, such as those dealing with Indian claims,
patent infringement, water rights, and the like retain the same
preclusive effect on other remedies that they have now. Similarly,
statutory provisions which prohibit injunctive or declaratory re-
lief in certain situations continue to be effective where appli-
cable {e.g., federal tax cases, 26 U.S.C. § 7421 and 28 U.S.C.
§773b).

On the other hand, the language of the recommendation should
not be taken as withdrawing alternative remedies where they
now exist. No new authority is conferred in situations dealt
with by statutes granting consent to suit; but nothing is taken
away. Presumably there are situations now in which specific

230 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES

relief can be obtained even though monetary relief for the claim
involved is not authorized by a statute consenting to suit; an
example might be a suit to enjoin a federal officer from engaging
in an intentional tort, a situation in which the damage remedy
against the United States is excluded by the Tort Claims Act,
but without affecting the availability of specific relief.

IV. Other Needed Reforms

The present recommendation is devoted to sovereign im-
munity in suits for specific relief in federal courts, but there are
related reforms that are needed in order to realize the full bene-
fits of withdrawing sovereign immunity as a defense in actions
challenging federal administrative behavior and seeking relief
other than money damages.

A. Gaps in Tucker and Tort Claims Acts

There are several situations in which neither monetary nor
specific relief can now be obtained and the plaintiff has no
judicial remedy at all, even though the matter is otherwise ap-
propriate for judicial consideration. These cases come about mainly
because of gaps in the Tucker and Tort Claims Acts, and also be-
cause of the lack of full coordination between these two legisla-
tive systems. Two situations in which monetary relief should
probably be expanded are: (1) where monetary relief cannot
be had in the Court of Claims or under the Tucker Act because
the claim is quasi-contractual or restitutionary in character (con-
tract implied in law rather than contract implied in fact) ; and
(2) where tort damages cannot be recovered under the Federal
Tort Claims Act because of the exceptions — especially that ex-
cluding most intentional torts — contained in that enactment. The
quasi-contract problem remains a real one in theory, although
the Court of Claims has been adept at circumventing it by hold-
ing in case after case that the particular contract is "implied in
fact." There is no way around the tort-damage problem ex-
cept by amendment of the Federal Tort Claims Act. Reconsidera-
tion of the question of when the United States should be liable
for the torts of its officers is long overdue; in the process it
may be desirable to clarify inconsistent interpretations of other
aspects of the Tort Claims Act.

The relation of these matters to sovereign immunity is readily
apparent. So long as there are unjustified gaps in the avail-
ability of monetary compensation, there will be pressure to grant
specific relief, even in instances where monetary relief is clearly

REC. 9. SOVEREIGN IMMUNITY 231

preferable. There will be, too, substantial risk to the develop-
ment of an orderly and coherent body of law. For instance, there
is no longer any justification at all for excluding contracts "im-
plied in law" from the Tucker Act. There are tendencies, flowing
from that exclusion, to push such claims under the Tort Claims
Act or to expand the concept of contracts "implied in fact". There
may also be injunction suits brought where the claimant would
rather have the money, simply because no monetary relief is
available. Other examples come from some of the exceptions to
the Tort Claims Act which tend to put pressure on the concept
of what is a "taking" redressable under the Tucker Act. For
Congress to be in a position to make an intelligent choice among
the possibilities of monetary compensation, specific relief, or both,
these statutory exclusions from the Tucker and Tort Claims Acts
should be reviewed for current soundness.

B. Subject Matter Jurisdiction of Federal District Courts

The Committee's recommendation does not vest subject mat-
ter jurisdiction on federal district courts in any situation in
which it does not now exist; it merely provides that certain
actions shall not be dismissed, or relief denied, solely on sover-
eign immunity grounds. This leaves the possibility that some
actions for specific relief could not be brought either because
the plaintiff's complaint does not arise under federal law or be-
cause, even though a federal question is stated, the case must
come within the general federal question provision of 28 U.S.C.
§ 1331 and the amount in controversy does not exceed $10,000.
An example of the former kind is Malone v. Bowdoin, 369 U.S.
643 (1962), which was an ejectment action against a federal
officer. In that case, which was originally brought in a state
court, federal jurisdiction rested upon the removal statutes, but
it is doubtful that the case could have been brought originally
in a federal district court since the plaintiff's claim rested on
state law. The quiet title statute, discussed below, would remedy
this deficiency. The second problem, that of jurisdictional amount
in certain federal-question cases, would be solved by the enact-
ment of Recommendation 7 of the Administrative Conference,
adopted December 12, 1968, providing for the elimination of the
jurisdictional-amount requirement in judicial review actions.

C. Quiet Title Statute

Regardless of whether or not the sovereign immunity doctrine
is abolished, a special statute authorizing suits to quiet title

232 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES

against the United States is desirable. Subject matter jurisdic-
tion of federal district courts, as indicated earlier (see also p. 33,
supra), will be doubtful in some cases without such an enact-
ment. Moreover, some procedural aspects of land dispute litiga-
tion involving the United States deserve special treatment {e.g.,
questions of interlocutory relief, jury trial, multiple parties, re-
lation to eminent domain). The Committee on Judicial Review
hopes to report on this matter at a later time.

D. Service of Process and Venue Problems

1. Service of process and parties defendant. Rule 4(d)(4) gov-
erns service of process upon the United States. It provides that
process must be served by delivery of a copy of the summons
and complaint to the United States Attorney for the district in
which the action is brought. In addition, a copy of the summons
and complaint must be sent by registered or certified mail to
the Attorney General of the United States in Washington, D.C.
Failure to notify the Attorney General has been held to require
dismissal (Smith v. McNainara, 895 F.2d 896 (10th Cir. 1968) ;
Messenger v. United States, 231 F.2d 328 (2d Cir. 1956) ; Lem-
mon V. Social Security Administration, 20 F.R.D. 215 (E.D. S.C.
1957), although a few decisions prior to the 1966 amendment of
Rule 15(c) permit the defect to be cured when dismissal would
mean the barring of plaintiff's claim because of the running of
the statute of limitation. Rollins v. United States, 286 F.2d 761,
768 (9th Cir. 1961) ; Ftigle v. United States, 157 F.Supp. 81
(D.Mont. 1957) ; the effect of the 1966 amendment to Rule
15(c) is discussed, infra. Moreover, in an action attacking the
validity of an order of an officer or agency of the United States,
if the officer or agency has not been made a party to the action,
a copy of the summons and complaint also must be sent by regis-
tered or certified mail to the relevant federal officer or agency.

Rule 4(d)(5), which supersedes prior inconsistent statutes,
must be followed to effect service of process on an officer or
agency of the United States, A copy of the summons and com-
plaint must be delivered to the ofl^cer or agency being sued and
service must be made on the United States itself as provided
for in Rule 4(d) (4). If the federal agency involved is a corpora-
tion, Rule 4(d) (5) requires that service also be made on the
agent of the corporation as provided in Rule 4(d) (3), in addi-
tion to service upon the United States under Rule 4(d)(4).

Section 1391(e) of Title 28, added to the Judicial Code in
1962, dispenses with the requirement of personal service in ac-

REC. 9. SOVEREIGN IMMUNITY 233

tions in which each defendant is an officer or employee of the
United States or any agency thereof acting in his official capacity
or under color of legal authority. In cases of this type, delivery
of the summons and complaint may be by certified mail rather
than personal delivery if the officer or agency to be served is
beyond the territorial limits of the district in which the action
is brought. Other aspects of Rule 4, however, continue to be ap-
plicable. Thus in any such case service must be made upon the
United States by notifying the Attorney General as provided
in Rule 4(d) (4).

The size and complexity of the federal government, coupled
with the intricate and technical law concerning official capacity,
parties defendant, and the like, have given rise to innumerable
cases in which a plaintiff's claim has been dismissed because
the wrong defendant was named or served. See the full discus-
sion in Byse, Suing the "Wrong" Defendant in Judicial Review
of Federal Administrative Action, 11 Harv. L. Rev. 40 (1963) ;
Davis, Suing the Government By Falsely Pretending To Sue An
Officer, 29 U. Chi. L. Rev. 435 (1962). The unsatisfactory state
of the law has been recognized for some time and three attempts
have now been made to cure the deficiencies :

First, the Mandamus and Venue Act of 1962, 28 U.S.C §§ 1361,
1391(e), circumvents the formerly troublesome requirement that
superior officers be joined as parties defendant by allowing na-
tionwide substituted service on the superior officer. Although the
superior officer still must be joined when the law of parties
considers him indispensable, the requirement can now be met
by mailing a copy of the summons and complaint to the superior
officer, thus allowing actions to proceed other than at the home
base of the superior officer (usually the District of Columbia).
The legislative history of the provision is to the effect that the
law should not be tailored for the convenience of the govern-
ment, but rather there should be "readily available, inexpensive
judicial remedies for the citizen who is aggrieved by the workings
of Government." The Congress noted that the law of parties
defendant was not altogether clear either in logic or consistency
and that such actions "are in essense against the United States."
1962 U.S. Cong. & Adm. News 2784-2787. Hence Congress seems
committed to providing a path through the procedural maze.
Second, Rule 25(d) of the Federal Rules of Civil Procedure
was amended in 1961 to provide for the automatic substitution
of successors in office. This broad remedial provision is appli-
cable to any action in which a "public officer" is sued in his

234 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES

"official capacity." The rule also states that "any misnomer not
affecting the substantial rights of the parties shall be disregard-
ed" and that the officer may be "described as a party by his official
title rather than by name."

Third, Rule 15(c) of the Federal Rules of Civil Procedure
was amended in 1966 to make clear that an amendment adding
or changing parties defendant in actions "with respect to the
United States or any agency or officer thereof" relates back to
the date of the original pleading whenever process was delivered
or mailed "to the United States Attorney or his designee, or the
Attorney General of the United States, or an agency or officer
who would have been a proper defendant if named." This sen-
tence allows a plaintiff who is in doubt concerning the identity
of the proper officer or agency to commence his action by serving
process on the United States Attorney, or the Attorney General,
or an agency or officer who would have been a proper defendant
if named. Difficulty of ascertaining the proper defendant is often
understandable considering the vast array of government officers
and agencies and technicalities that govern parties defendant.
Under Rule 15(c) the plaintiff who has served any one of the
persons designated may correct his pleading when the United
States moves to dismiss on grounds that a particular officer was
not named or joined as a defendant. Cases holding to the contrary
either were decided prior to the 1966 amendment of Rule 15(c)
or they are erroneous. In Smith v. McNamara, 395 F.2d 896
(10th Cir. 1968), for example, dismissing an action because the
proper officer was not served, the court's attention was not di-
rected to the amendment to Rule 15(c). Dismissal is proper
under the amended Rules only when the plaintiff fails to amend
his pleading and to complete service on the proper officer within
a reasonable time after the defect is raised.

A liberal application of the three remedial provisions discussed
above should prevent dismissals based on technicalities of the
law of officers. The Congress and the draftsmen of the Federal
Rules have indicated with great clarity that actions challenging
federal conduct should be decided on the merits rather than on
narrow procedural grounds. Although the law of parties defend-
ant remains unchanged, the consequences of not selecting or
serving the proper defendant at the outset, or failing to substi-
tute a successor in office, have been ameliorated. The Department
of Justice should take full note of these recent changes and in-
form United States Attorneys of their import.

If the amendments to Rules 15(c) and 25(d), coupled with

REC. 9. SOVEREIGN IMMUNITY 235

the extraterritorial service of process provision of 28 U.S.C.
§ 1391(e), do not remedy the unsatisfactory case law relating to
service of process and parties defendant in suits against federal
officers, further reform will be required. One possibility, eliminat-
ing all technical problems, would be to provide for service of
process upon the United States Attorney of the district in which
the action is brought, without more, thus imposing on the De-
partment of Justice the burden of identifying the federal officer
or agency that should be notified and the manner in which such
notice is given. As long as the Government through its lawyers
has adequate notice of the suit, dismissal because of technical de-
fects about parties defendant is inappropriate.

2. Venue. The venue part of the Mandamus and Venue Act of
1962, 28 U.S.C. § 1391 (e), provides for venue of the type of action
that the Committee's recommendation is concerned with. 28 U.S.C.
§ 1391(e) allows actions against federal officers or agencies, act-
ing in their official capacity or under color of legal authority,
to be brought in the district in which "(1) a defendant in the
action resides, or (2) the cause of action arose, or (3) any real
property involved in the action is situated, or (4) the plaintiff
resides if no real property is involved in the action." This pro-
vision does not appear to be applicable to suits against the United
States. Although there is a special venue provision dealing with
actions in which the United States is a defendant, that provision,
28 U.S.C. § 1402, applies only to three kinds of damage actions
brought under 28 U.S.C. § 1346 (Tucker Act cases. Federal Tort
Claims Act cases, and federal tax cases). And the general venue
provision applicable to federal-question cases, 28 U.S.C. § 1391
(b), is difficult to apply since it allows the action to be brought
only in the district where "all defendants reside, or in which
the claim arose." If the United States, like a corporation, resides
where it is doing business, i.e., everywhere, the general venue
provision of § 1391 (b) is too broad since suit could be brought
on any claim in any judicial district chosen by the plaintiff;
on the other hand, if, as seems more likely, a residence cannot
be attributed to the United States, the action may be brought
only where the cause of action arose, a much narrower venue
choice than provided by 28 U.S.C. § 1391(e), which was drafted
with the situation of the suit against the officer in mind.

The Committee's recommendation, insofar as it permits the
plaintiff to name the United States as defendant, is unlikely to
be fully effective unless the venue provisions of 28 U.S.C. § 1391
(e) are amended to include actions of the same type in which

236 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES

the United States is the named defendant. Until that happens,
the suit against the officer, with the ample venue choice given
by 28 U.S.C. § 1391(e), is likely to remain the manner in which
actions are cast.

If 28 U.S.C. § 1391 is amended to include actions in which the
United States is named defendant, two other changes in the sec-
tion would be desirable. Fi7-st, § 1391 (e) has been held inappli-
cable to territories such as the Canal Zone (Leber v. Canal
Zone Central Labor Union, 383 F.2d 110 (5th Cir. 1967)), an
oversight that should be remedied. Second, § 1391 (e) prohibits
the joinder of private persons or state officials as defendants
since it is expressly limited to cases "in which each defendant
is an officer or employee of the United States or an agency there-
of." (Emphasis added.) Toivn of East Haven v. Eastern Airlines,
282 F.Supp. 507 (D.Conn. 1968) ; Chase Savings & Loan Ass'n
V. Federal Home Loan Bank Board, 269 F.Supp. 965 (E.D.Pa.
1967). There is no functional justification for this limitation,
which prevents relief in some situations in which the federal
courts can make a special contribution. In many public land con-
troversies, for example, three parties are involved — the official,
a successful applicant, and an unsuccessful one. Effective relief
cannot be obtained in an action in which the United States or
its officer is not involved ; but if the government is named as
defendant, § 1391 (e) prevents the joinder of the other private
person (who cannot be joined as a plaintiff because his interest
is adverse to that of the plaintiff) . Another common type of
situation in which the limitation is troublesome is when specific
relief is sought against federal and state officers who are coop-
erating in a regulatory or enforcement program. 28 U.S.C.
§ 1391(e) should be amended so as to allow for effective relief
and binding judgments in multiple party situations.

CONCLUSION

Compared to other contemporary social problems — race, pov-
erty, urban decay, and the like — sovereign immunity is relatively
trivial and unimportant. Yet it is a subject on which the Ad-
ministrative Conference of the United States may make a modest
contribution in rationalizing a complex and intricate specialty
of federal law. The Committee on Judicial Review, believing that
the doctrine of sovereign immunity has outlived its usefulness,
urges the Conference, by adopting the Committee's recommen-
dation, to broaden the opportunities of citizens to obtain judicial
review of federal administrative actions.

RECOMMENDATION NO. 10

JUDICIAL ENFORCEMENT OF ORDERS OF THE
NATIONAL LABOR RELATIONS BOARD

RECOMMENDATION

The orders of most major independent i-egulatory agencies
normally become enforceable automatically unless challenged in
court. The statutory requirement that an order of the NLRB
can be made effective only by affirmative action to obtain judicial
confirmation of its terms, even when its validity is wholly un-
contested, is contrary to efficient law enforcement. The Adminis-
trative Conference of 1961-62 urged that NLRB orders be treated,
for purposes of judicial review, like those of the other major
independent administrative agencies. That recommendation re-
mains as sound today as when it was first made. The present
practice burdens the courts with unnecessary proceedings whose
only product is delay rather than added protection against ill-
founded action. In the absence of any challenge after due notice
to the parties, NLRB orders should be enforceable by the U.S.
Courts of Appeals without further intermediate steps.

237

REPORT OF THE COMMITTEE ON JUDICIAL REVIEW
IN SUPPORT OF RECOMMENDATION NO. 10

Unlike the orders of other Federal agencies included in the
Committee's study, orders of the National Labor Relations
Board are not self-enforcing. Rather, the Board must seek an
order of enforcement from a Court of Appeals. This involves
a period of waiting to see if a party to the case intends to seek
judicial reviev^ of the order. It serves no useful purpose but op-
crates to delay the effectiveness of NLRB orders and to impose
unnecessary costs on the Board.

Orders of other agencies, as detailed herein, are effective un-
less set aside upon court review. No reason for continuation of
this special treatment of NLRB orders has been discovered,
and it is the conclusion of the Committee that these orders should
be accorded the same finality given to the orders of other agencies.

The problem was considered in detail by the 1961-62 Adminis-
trative Conference, and that Conference recommended a pro-
cedure which would result in automatic judicial enforcement of
NLRB orders if no party promptly challenges the order. The
procedure would have afforded a period of 45 days within which
to challenge the order. If, after due notice to all parties, no
such challenge were forthcoming, the order would be enforced
without further proceedings by the entry of an appropriate court
decree. (Recommendation No. 18 of the 1961-62 Conference.)

This relatively non-controversial recommendation has not been
implemented, apparently because it has been linked with other
more controversial proposals to amend the National Labor Re-
lations Act. The Committee believes that the recommendation is
sound. The supporting reasons are set forth in the report which
accompanied the 1962 recommendation, attached hereto as Ap-
pendix II. Appendix I is a current review of the subject.

Scope of Memorandum

Professor Jaffe has noted that problems concerning the en-
forcement of administrative regulations and orders

"arise in large measure from the division of the enforcement function be-
tween agencies and the courts. . . . [The most common sanctions for

238

REC. 10. REVIEW OF NLRB ORDERS 239

disregard of administrative orders] cannot be imposed without at some
point running the gauntlet of judicial scrutiny, however much the degree
of scrutiny may vary in different situations. When the process is the ul-
timate one of execution, it is customary for judicial action to precede ex-
ecution." Jaffe, Judicial Control of Administrative Action (1965) at 261.

He has also pointed out that there are

"two stages in which the character of a remedy may be brought into ques-
tion. Labor Board orders, for example, are idefinitely subject to court re-
view and cannot be enforced unless and until a court, on motion of the
Board, enters its own enforcing decree. Other orders become final, usually
after sixty days, if the respondent has not sought review within that
period." Id., at 266.

Enforcement statutes for orders of the various administrative
agencies and executive departments listed in the discussion sec-
tion of this memorandum have been examined in an attempt to
discover which agencies, in addition to the NLRB, issue orders
which are not self-enforcing. Assuming absence of voluntary
compliance with a given order, the NLRB must, in practice,
take the initiative to subject its own orders to judicial review
in order to insure their enforcement. Other agencies, e.g., the
FTC, may rely upon an aggrieved party being required to in-
stitute review proceedings on penalty of having the order in
question become final without judicial review.

No attempt has been made to go beyond the statutes them-
selves into the rules of practice of any agency. Nor has any
attempt been made to examine the legislative history of any of
the various statutory provisions. The review statutes have been
classified for descriptive purposes into four general categories.

Conclusion

Of all of the agencies examined, only the NLRB issues non-
self-enforcing orders. Orders of the other agencies, if review-
able, become final within a specified time unless a petition for
review is filed by a party aggrieved by the agency's action.

Discussion

The review procedures may be grouped into four general cate-
gories:

1. NLRB Orders. 29 U.S.C. § 160(e) provides in part:

"The Board shall have power to petition any court of appeals of the
United States, or if all the courts of appeals to which application may be
made are in vacation, any district court of the United States within any
circuit or district, respectively, wherein the unfair labor practice in ques-

240 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES

tion occurred or wherein such person resides or transacts business, for
the enforcement of such order and for appropriate temporary relief or
restraining order, and shall file in the court the record in the proceed-
ings, as provided in section 2112 of Title 28. . . Upon the filing of the rec-
ord with it the jurisdiction of the court shall be exclusive and its judg-
ment and decree shall be final, except that the same shall be subject to
review by the appropriate United States court of appeals if application
was made to the district court as hereinabove provided, and by the Su-
preme Court of the United States upon writ of certiorari or certification
as provided in section 1254 of Title 28."

Section 160(f) provides:

"Any person aggrieved by a final order of the Board granting or deny-
ing in whole or in part the relief sought may obtain a review of such
order in any United States court of appeals in the circuit wherein the
unfair labor practice in question was alleged to have been engaged in or
wherein such person resides or transacts business, or in the United
States Court of Appeals for the District of Columbia, by filing in such
court a written petition praying that the order of the board be modified
or set aside. . . . Upon the filing of such petition, the court shall proceed
in the same manner as in the case of an application by the Board under
subsection (e) of this section, and shall have the same jurisdiction to
grant to the Board such temporary relief or restraining order as it deems
just and proper, and in like manner to make and enter a decree enforcing,
modifying, or setting aside in whole or in part the order of the Board ;
the findings of the Board with respect to questions of fact if supported
by substantial evidence on the record considered as a whole shall in like
manner be conclusive."

The operation of the review procedure established by these pro-
visions is fully discussed in Recommendation 18 of the 1962
Administrative Conference. Here it is sufficient to say that these
provisions differ in two important respects from the other stat-
utory patterns for judicial review discussed below. First, sec-
tion 160(f) provides for no time limit within which an aggrieved
party must file a petition for review before the order in question
becomes enforceable. Second, the agency itself is given the power
to initiate action before the reviewing court. The effect of these
provisions is clearly to deprive all NLRB orders of enforce-
ability until passed upon by a court of appeals.

2. Other Orders Revieived by Courts of Appeals. A second
review procedure (and the most frequently encountered among
those examined) is illustrated by the Federal Trade Commission
statute. 15 U.S.C § 45(c) provides:

"Any person, partnership, or corporation required by an order of the
Commission to cease and desist from using any method of competition or
act or practice may obtain review of such order in the court of appeals
of the United States, within any circuit where the method of competition
or the act or practice in question was used or where such person, part-

REC. 10. REVIEW OF NLRB ORDERS 241

nership, or corporation resides or carries on business, by filing: in the
court, within sixty days from the date of the service of such order, a
written petition prayinjj that the order of the Commission be set
aside. . . Upon such filing: of the petition the court shall have jurisdic-
tion of the proceedinu:, and of the question determined therein concur-
rently with the Commission until the filiner of the record and shall have
the power to make and enter a decree affirming, modifying:, or setting
aside the order of the Commission, and enforcing the same to the extent
that such order is affirmed and to issue such writs as are ancillary to its
jurisdiction or are necessary in its judgment to prevent iniury to the
public or to competitors pendente lite . . . The judgment and decree of
the court shall be final, except that the same shall be subject to review
by the Supreme Court upon certiorari, as provided in section 347 of Title
28."

15 U.S.C. § 21(c) is another review provision essentially similar
to section 45(c) and governs Robinson-Patman Act cases. Sec-
tion 45(g) specifically provides that FTC orders become final
upon the expiration of certain periods of time following the
entry of the order, action by a court of appeals, or filing of a
petition for certiorari, or immediately upon denial of a petition
for certiorari.

Other agencies whose orders are reviewed under essentially
similar provisions, becoming final after sixty days unless a peti-
tion for review is filed are, with the appropriate citation :

(1) Atomic Energy Commission (28 U.S.C. § 2342; 42 U.S.C. §
2239(b)).

(2) National Transportation Board (49 U.S.C. § 1468 (a)). A special
provision, 49 U.S.C. § 1485(e), expressly imposes a duty to observe and
comply with orders while they are in effect on the parties at whom they
are directed. In most other cases this duty is implicit but is not expressly
set out.

(3) Federal Communications Commission (47 U.S.C. § 402(a); 28
U.S.C. § 2341 et seq.).

(4) Federal Power Commission (15 U.S.C. § 717r(b) ; 15 U.S.C. §
8251).

(5) Securities and Exchange Commission (15 U.S.C. § 77i(a).

(6) Subversive Activities Control Board (50 U.S.C. § 793).

(7) Department of Agriculture (certain orders) (7 U.S.C. § 346a(i);
28 U.S.C. § 2341 et seq.).

(8) Department of Health, Education, and Welfare (certain orders)
(21 U.S.C. §§ 348(g), 355(h); 15 U.S.C. § 1262(a)(2)(B)).

(9) Department of Justice (certain orders) (22 U.S.C. § 1631g(f)).

In other cases the petition must be filed in a court of appeals
within thirty days,

(1) Federal Coal Mine Safety Board of Review orders under 3 U.S.C.
§ 478(a) and,

(2) Department of Agriculture orders under 7 U.S.C. § 194(a),

242 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES

or in a court of appeals within ninety days,

(1) Department of Defense orders under 33 U.S.C. § 505 and,

(2) Department of Health, Education and Welfare orders under 21
U.S.C. § 371(f).

3. Orders Reviewed By Other Courts According to Special
Statutory Provisions in Each Case. The following agencies issue
certain orders which are reviewed according to particular pro-
cedures set out in the Code section cited. In no case, however,
IS an agency required to seek judicial review of its own orderi
as in NLRB cases:

(1) Interstate Commerce Commission (in the district courts) 28
U.S.C. §1336 (a);

(2) Civil Service Commission (in the district courts within thirty
days), 5 U.S.C. § 118k (c) ;

(3) Treasury Department orders, issued prior to Reorganization Plan
No. 1 of 1965 by the Tariff Commission (in the Court of Customs and
Patent Appeals), 19 U.S.C. § 1515;

(4) Certain orders of the Department of Agriculture (in the district

^To L' l^-^-^- ^ ^^^^ ^^^ ^^^'^' ^ U.S.C. § 608(c) (15) (B) (20 days),
7 U.S.C. §499g(c) (30 days), and 7 U.S.C. § 210(f) (one year);

(5) Department of Labor orders under 33 U.S.C. § 921 (in the dis-
trict courts within 30 days) ; and

(6) Post Office Department orders under 39 U.S.C. §6212 (in the
District of Columbia Court of Appeals only and within 20 days) .

4. Orders Revieived Under the Administrative Procedure Act.

The orders of some agencies are reviewable only in nonstatu-
tory review proceedings in accordance with the Administrative
Procedure Act, 5 U.S.C. § 703:

"In the absence or inadequacy [of a statutory review proceeding], the
torm of proceeding for judicial review shall be . . . any applicable form of
legal action (including actions for declaratory judgments or writs of
prohibitory or mandatory injunction or habeas corpus) in any court of
competent jurisdiction. ..."

Orders reviewable only by injunction or declaratory judg-
ment under these general provisions include orders not men-
tioned above of the following agencies :

(1) Federal Home Loan Bank Board,

(2) Department of Agriculture,

(3) Department of Commerce,

(4) Department of the Interior,

(5) Department of Justice,

(6) Department of Labor,

(7) Department of State and,

(8) Department of the Treasury.

REC. 10. REVIEW OF NLRB ORDERS 243

In these situations, however, the administrative order is final
and effective unless and until it is set aside by the court pro-
ceeding challenging its validity.

Summary

In categorizing the various types of judicial enforcement pro-
visions and classifying agencies in these categories, no attempt
has been made to be exhaustive beyond the list of administra-
tive proceedings set out in the document Special Statutory
Provisions Governing Judicial Review of Federal Administra-
tive Proceedings, Parts I & II, Committee on Judicial Review,
Administrative Conference of the United States, August, 1962.
Citations found therein were updated through 1967 by reference
to Supplement III to the United States Code, 1964. Provisions
of the Code relating to the Departments of Transportation and
Housing and Urban Development were also examined. The focus
of the inquiry was to discover whether among the various types
of administrative orders described in the above mentioned docu-
ment there were any which ymist be enforced in a manner simi-
lar to NLRB orders. The NLRB situation was found to be unique.

APPENDIX I
1962 RECOMMENDATION 18 WITH SUPPORTING REPORT

RECOMMENDATION NO. 18

It Is Recomynended That —

The National Labor Relations Act be amended to provide in substance that
a petition for review of a Board decision and order may be filed within 30
days in the appropriate court of appeals by the party seeking review; that if
no such petition is filed, the board shall forthwith file a copy of the Board
decision and order in an appropriate circuit court of appeals of the United
States and that notice of such filing shall be served upon each respondent;
that 15 days .shall then be given to each respondent after notice to file objec-
tions to the order; and that if no such review is requested within that time,
the clerk of the court shall then enter forthwith a decree enforcing the order
of the Board.

244 administrative conference of the united states

Report of the Committee on Judicial Review of the Admin-
istrative Conference of the United States in Support of
Recommendation on Enforcement of NLRB Orders

I. The Problem

Under the present statutes, orders of the National Labor Re-
lations Board lack binding effect until entry of a decree of en-
forcement by a Court of Appeals. It has been contended that this
requirement contributes to the delays which constitute a serious
impediment to the vitality of the national labor relations laws.
The question is whether there is a need to remedy the situation
and, if so, what measures would be appropriate.

II. Present Procedures for Enforcement of NLRB Orders

A. The Statute

Section 10(c) of the National Labor Relations Act, as
amended, provides that if the Board finds that a person has
engaged in an unfair labor practice, "then the Board shall state
its findings of fact and shall issue and cause to be served on such
person an order requiring such person to cease and desist from
such unfair labor practice, and to take such affirmative action
including reinstatement of employees with or without back pay,
as will effectuate the policies of this Act."

Section 10(e) provides that "The Board shall have power to
petition any court of appeals of the United States, or if all the
courts of appeals to which application may be made are in vaca-
tion, any district court of the United States, within any circuit
or district, respectively, wherein the unfair labor practice in
question occurred or wherein such person resides or transacts
business, for the enforcement of such order and for appropriate
temporary relief or restraining order, and shall file in the court
the record in the proceedings, as provided in section 2112 of title
28, United States Code. Upon the filing of such petition, the
court shall cause notice thereof to be served upon such person,
and thereupon shall have jurisdiction of the proceeding and of
the question determined therein, and shall have power to grant
such temporary relief or restraining order as it deems just and
proper, and to make and enter a decree enforcing, modifying,
and enforcing as so modified, or setting aside in whole or in
part the order of the Board."

Under Section 10(f), any person aggrieved by a final order

REC. in. REVIEW OF NLRB ORDERS 245

of the Board may obtain a review of such order in a court of
appeals under similar proceedings.

Section 10(g) provides that the commencement of proceedings
under section 10(e) or (f) shall not, unless specifically ordered
by the court, operate as a stay of the Board's order. Section 10
(i) states that "petitions filed under this Act shall be heard
expeditiously, and if possible within ten days after they have
been docketed."

B. The NLRB's Statements of Procedure

Pursuant to section 3(a) (2) of the Administrative Procedure
Act, the NLRB has published in the Code of Federal Regula-
tions a series of Statements of Procedure. The portions dealing
with enforcement of Board orders are as follows:

1. Comi^Uance with Board Decision and Order

Section 101.13. (a) Shortly after the Board's decision and order is is-
sued the director of the regional office in which the charge was filed com-
municates with the respondent for the purpose of obtaining compliance.
Conferences may be held to arrange the details necessary for compliance
with the terms of the order.

(b) If the respondent effects full compliance with the terms of the
order, the regional director submits a report to that effect to Washing-
ton, D.C., after which the case may be closed. Despite compliance, how-
ever, the Board's order is a continuing one; therefore, the closing of a
case on compliance is necessarily conditioned upon the continued observ-
ance of that order; and in some cases it is deemed desirable, notwith-
standing compliance, to implement the order with an enforcing decree.
Subsequent violations of the order may become the basis of further pro-
ceedings.

2. Judicial Revieivs of Board Decision and Order

Section 101.14. If the respondent does not comply with the Board's
order, or the Board deems it desirable to implement the order with a court
decree, the Board may petition the appropriate Federal court for enforce-
ment. Or, the respondent may petition the circuit court of appeals to re-
view and set aside the Board's order. Upon such review or enforcement
proceedings, the court reviews the record and the Board's findings and
order and sustain them if they are in accordance with the requirements
of the law. The court may enforce, modify, or set aside in whole or in
part the Board's findings and order, or it may remand the case to the
Board for further proceedings as directed by the court. Following the
court's decree, either the Government or the private party may petition
the Supreme Court for review upon writ of certiorari. Such applications
for review to the Supreme Court are handled by the Board through the
Solicitor General of the United States.

246 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES

3. Compliance With Court Decree

Section 101.15. After a Board order has been enforced by a court de-
cree, the Board has the responsibility of obtaining compliance with that
decree. Investig-ation is made by the regional office of the respondent's
efforts to comply. If it finds that the respondent has failed to live up to
the terms of the court's decree, the general counsel may, on behalf of the
Board, petition the court to hold him in contempt of court. The court
may order immediate remedial action and impose sanctions and penalties.

4. Back-Pay Proceedings

Section 101.16. After a Board order directing the payment of back pay
has been enforced by a court order, the regional office computes the
amount of back pay due each employee. If informal efforts to dispose of
the matter prove unsuccessful, the regional director is then authorized to
issue a "backpay specification" in the name of the Board and a notice of
hearing before a trial examiner, both of which are served on the parties
involved. The specification sets forth the computations showing how the
regional director arrived at the net back pay due each employee. The
respondent must file an answer within 15 days of the receint of the
specification, setting forth a particularized statement of its defense. The
procedure before the trial examiner of the Board is substantially the same
as in [original unfair labor practice case].

C. Internal NLRB Procedures in Enforcing Board Orders

Upon the issuance of a Board order in an unfair labor practice pro-
ceeding directing the respondent employer or union to cease and desist
from committing the unfair labor practices which the Board has found
and directing the taking of such affirmative action as the Board finds
will effectuate the policies of the Act, the Regional Office in which the
case arose attempts to secure the voluntary compliance with this order.
If such compliance is not acheived the Regional Office refers the case to
Washington for the institution of enforcement proceedings in the appro-
priate Court of Appeals. The Appellate Court Branch seeks full enforce-
ment of all Board orders referred by the Regional Offices, unless the
Board itself directs otherwise. Court proceedings may also be instituted
by the employer or union against whom the order runs, or by any person
who is aggrieved by the Board's failure to grant the relief to which such
person believes himself to have been entitled.

When the case is received by the Appellate Court Branch (whether for
enforcement or on petition for review) the case is assigned to a briefing
attorney and to a briefing supervisor. Such assignments are normally
made in the order in which cases are referred for enforcement and, de-
pending upon the volume of work in the office at a particular time, will
be made from 1 day to 2 weeks after the case is received. The briefing
attorney reads the record, the briefs and exceptions filed by the parties,
the intermediate report, and the Board's decision, and then discusses the
issues in the case with his supervisor. This discussion, which normally
takes place within a week after the case is assigned, will determine
whether court proceedings will follow immediately or whether the case
will be referred back to the Board for reexamination or correction in the

REC. 10. REVIEW OF NLRB ORDERS 247

light of problems or possible errors which the briefing attorney and his
supervisor may have discovered. Only a very small percentage of the
cases are referred back to the Board. The balance are prepared immedi-
ately for court review. Normally a petition is filed in the court anywhere
from 3 weeks to 2 months after referral of the case for enforcement, de-
pending upon the complexities of the case. Special circumstances, for ex-
ample settlement negotiations, may delay the filing of a petition further
in some cases.

The briefing attorney prepares a draft of the proposed brief to be filed
in the Court of Appeals in support of the Board's order. The briefing
attorney also prepares a designation of the parts of the record which are
to be printed for the court's use in reviewing the Board's order. The
briefing supervisor reviews the brief and, using his best judgment, may
to the extent that it may be necessary either revise the draft or return it
to the briefing attorney with suggestions. The brief is then reviewed by
the Assistant General Counsel, who may have further changes to sug-
gest. Shortly before the date on which the brief is due in court (the due
dates are fixed by court rule varying from circuit to circuit and ordinar-
ily depend upon the date the proceeding was instituted), the brief will be
sent to the Government Printing Office and will be reviewed in page
proof by the Associated General Counsel and occasionally by the General
Counsel where the case may present issues of special interest to him. In
many cases a further brief, a "reply brief", is filed following the receipt
of the opponent's brief — such a brief is prepared and reviewed in the
same manner.

After all the briefs are on file, the Court of Appeals sets the case for
oral argument, which is ordinarily presented on behalf of the Board by
the brief writer or the supervisor assigned to the case. If the court's de-
cision is adverse or contains language which appears contrary to the best
interests of the Board, the brief writer and supervisor may recommend
the filing of a petition for rehearing. If filing such a petition is approved
by the Assistant and Associate General Counsels, it will be prepared and
reviewed in the same manner as the brief. . . .

Over the past 10 years a little more than 50 percent of the Board's
decisions and orders in unfair labor practice cases have been taken to
court on either a petition for enforcement or a petition for review. The
figure for Fiscal 1960 was 52 percent. The highest recent figure was 73
percent in 1952 — -a figure which stands alone as inexplicably high; the
lowest was 47 percent in 1955. Omitting 1952, the 10-year figures vary
between 47 percent and 57 percent.

The caseload of referrals for enforcement or review in recent years
has been as follows:

Fiscal year : ^<»- "f «"«•

1961 (to April 21) 173

1960 197

1959 155

1958 110

1957 .. 76

The Appellate Branch also handles contempt proceedings in cases in-
volving disobedience of a decree enforcing a Board unfair labor practice

248 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES

order, Section 10(e) interim injunctive relief pending enforcement or re-
view proceedings in the Courts of Appeals, and enforcement of Board
backpay orders issued following the entry of a decree requiring a respond-
ent to make whole employees who have been the victims of discrimina-
tion. Unlike proceedings for enforcement of a Board order, which are
initiated following referral from a Regional Office without further
authorization from the Board, contempt proceedings and proceedings
looking toward a 10(e) injunction are cleared with the Board and specifi-
cally authorized in each case. Upon the receipt of a recommendation from
a Regional Officer for the institution of contempt or 10(e) proceedings,
the case is assigned to a brief writer and supervisor, just as in a regular
enforcement case. They analyze the case and, if they concur with the Re-
gion's recommendation, they prepare a memorandum to the Board for
the signature of the General Counsel recommending the institution of ap-
propriate proceedings. If they disagree with the Region's recommenda-
tion, they prepare a memorandum for the Assistant General Counsel re-
turning the case to the Region. In either event, the memorandum is then
reviewed by the Assistant General Counsel and the Associate General
Counsel before being forwarded either to the General Counsel for his ap-
proval or transmission to the Board, or back to the Regional Office, as
the case may be. Where the question appears sufficiently close, a recom-
mendation adverse to that of the Region may also be submitted to the
General Counsel, and by him to the Board.

If the Board approves the institution of contempt or 10(e) proceed-
ings, the papers initiating the court proceeding are prepared by the
briefer and his supervisor and are reviewed in the same manner as an
enforcement brief. Contempt proceedings may involve a protracted hear-
ing before a court-appointed master and all the investigation and prepa-
ration for trial which precedes an ordinary unfair labor practice case.
This work will normally be handled by the briefing attorney, often with
the active cooperation of the Regional Office. Section 10(e) proceedings
normally involve a short oral argument before the Court of Appeals,
which will ordinarily be handled by the briefer or supervisor or Assist-
ant General Counsel. Subsequent steps to a contempt proceeding such as
briefs to the Master, exceptions to his report and oral argument in the
Court of Appeals will be handled in the same manner as briefs and oral
argument in an enforcement proceeding. Because of the importance and
exacting demands of contempt and 10(e) litigation, such cases will nor-
mally be assigned to brief writers of outstanding capacity or long
experience.

Backpay proceedings are referred in precisely the same manner as
other proceedings for enforcement of Board orders, and are handled in
the same manner as other enforcement proceedings except that instead
of a routine petition for enforcement, we file a motion with the court
asking that it direct the party objecting to the backpay award to indi-
cate its grounds for stating that the court's decree should not be
amended to include the specific amounts of backpay the Board has found
due. This procedure effectively narrows the issues before the court so
that our brief can be directed only to the specific points at issue rather
than encompassing all conceivable issues in the case.
(Statement of Dominick L. Manoli, Associate General Counsel of the

REC. 10. REVIEW OF NLRB ORDERS 249

NLRB before a Subcommittee on the House Committee on Education and
Labor, May 8, 1961.)

D. Background of the Provision Requiring Court of Appeals
Enforcement Order

At the time when the National Labor Relations Act was passed
in 1935, the enforcement provisions represented a great advance
over the situation which had prevailed under earlier Labor
Boards during the NRA period. Milton Handler, who was General
Counsel of the National Labor Board in the NRA period, testi-
fied that "under the present statute, interminable delays have
resulted from the fact that numerous administrative hearings
have been held by agencies without power to enforce their
decisions. . . . Hence the need of an administrative agency with
the power to issue orders enforcible in the courts." To the critics
who asserted that unprecedented powers were to be vested in
the new Board, Mr. Handler replied that "it must not be for-
gotten that the orders of the board are not self -executing ; they
can only be enforced in the courts. . ." (Legislative History of
theNLRA, p. 66).

Francis Biddle, who was chairman of the old National Labor
Relations Board, described the unsatisfactory enforcement
situation:

Between July 9, 1934, the date of its creation, and March 2, 1935, the
National Labor Relations Board issued findings and decisions in 111
cases. In 86 of these the Board found that violations had occurred. In
only 34 of these did the employer make appropriate restitution in accord-
ance with our decision. In the remaining 52 of the 86 cases such compli-
ance was not obtained. In these 52 cases, therefore, it was necessary for
the Board to attempt to obtain enforcement through the removal of the
'blue eagle' or through court action. Of these 52 cases the Board re-
ferred 33 to the Department of Justice.

The status of these 33 cases is as follows: In one case a bill in equity
has been filed in the district court. Seven cases have been referred to the
local United States Attorney, on the understanding that further evidence
must be secured by him in cooperation with the Board before instituting
suit. In none of these cases has suit been brought. In nine cases the De-
partment of Justice has advised the Board that further investigation on
certain points is necessary before the case can be referred to the local
United States Attorney, and in three cases the Department has advised
that as a matter of law no suit is justified. In 13 cases the Department
has not proceeded for various reasons . . .

What I am getting at is not in any sense a criticism of the Department
of Justice, but to show that the system under which we are working and
the machinery under which we are trying to enforce the law makes inevi-
table the break-down of legal enforcement, and the necessity for such

250 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES

machinery as the Wagner bill includes. (Legislative History of the
NLRA, p. 1469).

Mr. Biddle was of the opinion that "the solution ... is that
adequate powers be given to a single experienced agency to find
out the facts and carry through enforcement of the law up to
the point of review in the circuit court of appeals."

Senator La Follette commented: "Even that will be slow
enough,"

Mr. Biddle replied that Senator Wagner had eliminated one
step by providing they should go directly into the court of appeals
rather than the district court. He noted that "it is not in any
sense a novel procedure but on the contrary is one which has
been adequately tested by the experience of other administrative
tribunals, notable the Interstate Commerce Commission and the
Federal Trade Commission." (Legislative History of the NLRA,
pp. 1471-1473).

In summary, at the time of enactment of the court enforce-
ment provision of the Wagner Act, it was regarded as a distinct
improvement over the pre-existing situation; it was in line with
the Federal Trade Commission procedure in existence at that
time; and the delays in obtaining an effective order which have
recently been observed were not then foreseen.

In 1940, the Monograph of the Attorney General's Committee
on Administrative Procedure dealing with the National Labor
Relations Board noted (p. 2) :

The Board's orders are not self -executing; no penalty attaches to a viola-
tion thereof; and the Government must resort by petition to the appropri-
ate circuit court of appeals for enforcement of the ordei". . . . Since em-
ployers have nothing to lose by violating the provisions of the Act, ex-
cept to receive an admonition to discontinue their activities, amendments
to provide for more effective sanctions have frequently been advocated.
Proponents for change have suggested that . . . Board orders be made
effective upon issuance . . . none of these suggestions has eventuated in
congressional action.

In its Final Report in 1941, the Attorney General's Committee
on Administrative Procedure noted (pp. 82-83) :

Statutes creating administrative tribunals generally provide methods by
which their determinations may be judicially reviewed. In this way, a
number of methods have been established: First is the case in which the
administrative order is not self-operative and suit for enforcement must
be brought by the agency. For example, prior to 1906, no sanction was
provided for securing obedience to orders of the I.C.C. other than a suit
by the Commission to compel obedience. The same was true of the Fed-
eral Trade Commission Act until 1938, and it is true today of the Na-
tional Labor Relations Act. . . .

REC. 10. REVIEW OF NLRB ORDERS 251

A method of review which has found considerable favor in recent legis-
iation is that first enacted in the Federal Trade Commission Act of 1914,
that is, review in a Circuit Court of Appeals with discretionary appellate
jurisdiction in the Supreme Court. This method has been enacted both for
cases in which the admininstrative order is self-operative as those under
the Federal Trade Commission Act since 1938, and cases in which the
order carries no sanction until it is approved by the court, such as in the
case of orders of the National Labor Relations Board now.

However, the Attorney General's Committee did not make any
recommendations to change the situation under which the orders
of the NLRB lack a sanction until the Board obtains an en-
forcement order from the Court of Appeals.

The National Labor Relations Act was substantially amended
in 1947 (Taft-Hartley Act) and in 1959 (Landrum-Griffin
Amendments), but the Legislative Histories do not indicate any
proposals or debates dealing with delay in enforcement due to the
necessity for the Board to obtain a Court of Appeals order
before the Board's order would carry any sanctions.

III. Criticisms and Proposed Remedies
The "Cox Panel" Recommendation

(Report to the Senate Committee on Labor and Public Wel-
fare on Organization and Procedure of the NLRB, prepared by
the Advisory Panel on Labor-Management Relations Law, 86th
Congress, 2d Session, Senate Document No. 81.)

After noting that "no change ... is more important than
speeding up the processes of decisions in unfair labor practice
cases" and that [rights are] "hardly vindicated by a cease-and-
desist order which does not become effective through court en-
forcement until two years later" (p. 10), the Panel made the
following analysis and recommendation (pp. 16-17) :

Enforcemetit and review of Board orders. — Under the present statute
an NLRB order carries no legal sanctions. The respondent may ignore it.
The Board may file a petition for enforcement and 378 days later, on the
average, a judicial decree may be entered enforcing the order of the
Board.-" Violation of this decree would be punishable as contempt. The
long delay between the NLRB decision and an effective judicial decree is
another unsatisfactory aspect of the present unfair labor practice
procedure.

One cause of the delay is the slowness of all appellate litigation. It
takes time to print records and briefs. In some circuits the dockets are
heavy. Some circuit courts do not sit in the summer months. The average
time is built up by the 4 months mimimum delay attendant upon peti-

-" Memorandum from Hon. Boyd Leedom to a member of the staff of Senate Committee on
Labor and Public Welfare, Feb. 11, 1959.

252 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES

tions to the Supreme Court for writs of certiorari and the year or longer
which the Supreme Court takes to hear cases on the merits. Manifestly
this aspect of the problem is not peculiar to labor-management cases and
cannot be solved by changes in the National Labor Relations Act.

A controllable factor is the time spent in negotiating about compliance
with the Board's order. Once an order is passed there is no occasion for
reviews by attorneys on the staff of the General Counsel or the proposed
Administrator. If immediate compliance is not forthcoming, a judicial
decree should be obtained.

The necessity of the Government's seeking judicial relief in order to
put sanctions behind NLRB orders encourages procrastination by both
private parties and the NLRB staff. No one questions the importance of
allowing a full opportunity for judicial review but after the Board is-
sued an order in a contested case it is not unfair to put upon the respon-
dent the burden of complying or promptly seeking judicial relief.

The Federal Trade Commission Act provides that orders issued by the
Federal Trade Commission under section 5 shall become final unless a
petition for review is filed within 60 days. Violations of an order which
has become final are punishable by a penalty of $5,000 for each day the
violation continues. The monetary penalty seems inappropriate but it
would expedite the entire process of enforcement and judicial review to
adapt the rest of the Federal Trade Commission procedure to NLRB
cases. An NLRB order should become final if the respondent does not file
a petition for review within 30 days. Once the order becomes final the
Administrator should be required forthwith to file a copy in an appro-
priate circuit court of appeals, with notice to the respondent. If the re-
spondent does not file a petition for review within an additional 15 days,
the order of the NLRB should, unless the court otherwise directs, be en-
tered by the clerk as the decree of the court. Violations would be punish-
able by contempt. We also believe that any party to NLRB proceedings
should be allowed to intervene in the appellate proceedings. This would
clarify an uncertain issue.

These changes would accelerate postdecision litigation without impair-
ing the procedural or substantive rights of any party. The panel unani-
mously recommends their incorporation into the NLRA. The necessary
statutory changes will be found in sections 10(e) and (f) of the attached
bill.

Respectfully submitted.

David L. Cole,
Guy Farmer,
Arthur Goldberg,
Charles Gregory,
Denison Kitchel,
Plato E. Papps,
Gerard Reilly,
Louis Sherman,
Russell A. Smith,
George W. Taylor,
W. Willard Wirtz,
Archibald Cox, Chairman.

January 15, 1960.

REC. 10. REVIEW OF NLRB ORDERS 253

Sections 10 (e) and (f) of the "Cox Panel" bill are as follows:

"(e) Any person (except the Administrator) aggrieved by a final
order of the Board granting or denying in whole or in part the relief
sought may obtain a review of such order in any court of appeals of the
United States in the circuit wherein the unfair labor practice in question
was alleged to have been engaged in or wherein such person resides or
transacts business, or in the Court of Appeals for the District of Colum-
bia Circuit, by filing in such court within thirty days after the service of
such order a written petition praying that the order of the Board be mod-
ified or set aside. A copy of such petition shall be forthwith served upon
the Board and the Admininstrator and thereupon the Board shall file in
the court a transcript of the entire record in the manner and form pro-
vided under section 2112 of the Judicial Code. Upon such filing the court
shall have jurisdiction of the proceeding and of the question determined
therein, and shall have power to grant to the petitioner or any other
party including the Board such temporary relief or restraining order as
it deems just and proper, and to make and enter upon the pleadings, testi-
mony, and proceedings set forth in such transcript a decree enforcing,
modifying, and enforcing as so modified, or setting aside in whole or in
part, the order of the Board. Any party to the proceeding before the
Board shall be permitted to intervene in the court of appeals. No objec-
tion, that has not been urged before the Board on exceptions shall be con-
sidered by the court, unless the failure or neglect to urge such objection
shall b? excused because of extraordinary circumstances. The findings of
the Board with respect to questions of fact if supported by substantial ev-
idence on the record considered as a whole shall be conclusive. If either
party shall apply to the court for leave to adduce additional evidence and
shall show to the satisfaction of the court that such additional evidence
is material and that there were reasonable grounds for the failure to ad-
duce such evidence in the hearing before the Board, its member, agent,
or agency, the court may order such additional evidence to be taken be-
fore the Board, its members, agent, or agency, and to be made a part of
the transcript. The Board may modify its findings as to the facts, or
make new findings, by reason of additional evidence so taken and filed,
and it shall file such modified or new findings, which findings with re-
spect to questions of fact if supported by substantial evidence on the rec-
ord considered as a whole, shall be conclusive, and shall file its recom-
mendations, if any, for the modification or setting aside of its original
order. The jurisdiction of the court shall be exclusive and its judgment
and decree shall be final, except that the same shall be subject to review
by the appropriate circuit court of appeals if application was made to
the district court as hereinabove provided, and by the Supreme Court of
the United States upon writ of certiorari or certification as provided in
sections 239 and 240 of the Judicial Code, as amended (U.S.C, title 28,
sees. 346 and 347). Attorneys appointed by the Administrator shall ap-
pear on behalf of the Board in any proceeding under this subsection.

"(f) If no petition for review is filed within thirty days, the Adminis-
trator shall forthwith file a copy of the order of the Board in a circuit
court of appeals of the United States (including the Court of Appeals
for the District of Columbia) within any circuit wherein the unfair labor

254 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES

practice in question was alleged to have been engaged in or where a re-
spondent named in the order resides or transacts business and the court
shall cause notice of the filing to be served upon each respondent. Within
fifteen days of such service any respondent may file objections to the
order, and the court shall thereupon proceed in the manner provided by
subsection (e) as if a petition for review had been filed. If objections are
not filed within fifteen days of such service, the clerk of said court, un-
less otherwise ordered by the court, shall forthwith enter a decree en-
forcing the order of the Board.

(Note: References to "the Administrator" deal with a separate proposal
of the Cox Panel and can be deleted or supplanted by "the Board," as
appropriate.)

The "Puciyiski Subcommittee" Report

(Report of the Subcommittee on the NLRB of the House
Committee on Education and Labor, 1961)

After noting that "by all odds, the witnesses stressed the delay
in Labor Board processing of cases as the greatest impediment
to effectuating the policy of the United States to encourage the
practice and procedure of collective bargaining" (p. 8), and that
"the Committee finds that there is much needless delay in en-
forcement of Board orders" (p. 2), the Subcommittee made
the following summary of the testimony received in its hearings :

Enforcement and Review of Labor Board Orders

The problem of delay in proceeding before the Labor Board is com-
pounded by the further delay in gaining judicial enforcement of the
Labor Board order. Labor Board orders are not self-enforcing. The
Labor Board has no authority to punish for violation of its decrees.
Should a defeated party in a Labor Board proceeding decide simply to
ignore the Labor Board decree, the Labor Board must request the appro-
priate court to enforce its order. This process takes, on the average, over
a year. (Labor Board Member Boyd Leedom, then Chairman of the Labor
Board, informed the Cox Panel in 1959 that the process of obtaining ju-
dicial enforcement took 378 days.)

Many defeated parties take advantage of this year's delay. Dominick
L. Manoli, Associate General Counsel of the Labor Board, testified that:

But the year's delay in enforcement is not the only delay; much time is
spent administratively prior to seeking judicial enforcement. Jacob
Sheinkman, general counsel of the Amalgamated Clothing Workers of
America, described the process as follows :

After issuance of such (Labor Board) order, the case is returned

REC. 10. REVIEW OF NLRB ORDERS 255

to the regional office of the Board from whence it arose, and there
efforts are made to secure voluntary compliance with the terms of
the order. In many cases the offending party ignores the plea for
voluntary compliance, and only then are steps initiated to secure ju-
dicial enforcement by way of a decree of the appropriate U.S. court
of appeals. It has been our experience that an average of at least 4
months elapses from the date of the Board order until the necessary
papers are prepared and enforcement proceedings commenced in the
courts.

The significance of these delays was pointed out by the testimony of Al
Hartnett, secretary-treasurer of the International Union of Electrical,
Radio, and Machine Workers:

Mr. Hartnett. At the Greeneville Cabinet Co., in Greeneville,
Tenn., a man was discharged because of union activity. He was dis-
charged in April or May — I am not sure which it was — of 1950. We
filed a charge. The case was first decided by the Board on February
27, 1953. That is a long period of time between the time we filed the
charge and the time the finding is finally made by the Board. The
employer was told to reinstate three employees and to cease and de-
sist in discouraging union membership. We did not get enforcement
of that order even though it was issued on February 27, 1953, until
February 8, 1954, almost 4 years elapsing between the time of the
incident and the time we finally got enforcement of the order. * * *

As the situation now stands, a Board order is issued. We stumble
and fumble along. Nobody really makes any eff"ort to get it compiled
with. Maybe there is a posting, maybe there is not. Finally, a suffi-
ciently long period of time has gone by and enough pressure has
been generated, maybe somebody finds their way into a courtroom to
get enforcement of an order. * * *

Congressman Roosevelt. Is there any effective date now within
which an appeal from a Board order must be made? * * ♦

Mr. Hartnett. You can just delay, linger and wait. There is no
time limit. Delay, linger, and wait. Stall as much as you can, wait as
long as you can. By the time that somebody has gotten around to
doing something about enforcing the Board order, 9 times out of 10,
it is too late. The horse is gone, and the stable needs no locking at
this point.

Mr. Hartnett recommended the following:

First, we believe that orders shall be self-enforcing, with the bur-
den placed upon one who contests an order to seek its review within
a set period of time rather than as it now is upon the Board to insti-
tute enforcement proceedings. Second, we believe that Board orders
should be effective for purposes of contempt proceedings pending re-
view, unless the party seeking review can persuade the reveiwing
court of cause to the contrary and obtain a stay of the Board's order
* * *. We suspect that if the advantage of delaying the effectiveness
of Board orders were eliminated from review and enforcement pro-
ceedings, fewer Board orders would be conte.sted in court. The ad-
vantages flowing from elimination of delay to those whose rights

256 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES

have been infringed and to the public interest in seeking those rights
enforced are undeniable. (Prepared statement.)

Mr. Guy Farmer, former Chairman of the National Labor Relations
Board, and Mr. Louis Sherman, who served on the Cox Panel, gave joint
testimony to the same effect :

We have one very brief recommendation, although a very impor-
tant one. * * * We recommend that Board orders, which are now of
no effect until someone takes them into court to enforce, * * * be
made self-enforcing after a given period of time during which a re-
spondent would be given an opportunity to file a petition for review.
If no such petition were filed within that time, the Board order
would in effect become by filing in court a court order, and any viola-
tion of that order would subject that violator to the normal con-
tempt citations.

The Subcommittee then made the following finding and recom-
mendation :

The subcommittee finds that there is much needless delay in enforce-
ment of Labor Board decisions. The losing party "delays, lingers, and
waits" because disobedience of a Labor Board order is not punishable.

The subcommittee recommends a legislative change in sections 10(e)
and 10(f) to require that, in the absence of an agreement to comply
with the Board order, a petition for review of a Board decision and order
must be filed within 30 days in the appropriate court of appeals by the
party seeking review; that if no such petition is filed, the General Coun-
sel would be required to forthwith file a copy of the Board decision and
order in an appropriate circuit court of appeals of the United States
and that notice of such filing would be sent to the respondent named in
the order. An additional 15 days would then be given to the respondent
after notice to seek review by the court. If no such review is requested
within that time, the clerk of the court would then issue a decree enforc-
ing the order of the Board.

Statements of NLRB Officials Before the Pucinski Subcommittee

in 1961

Boyd Leedom, former chairman and present member of the
NLRB:

"I think the recommendation of the Cox committee should be adopted
and the law changed so that our orders are, to use the phrase that has
been applied, self-enforcing. . . . The thing that I think is bad and is dif-
ferent in our agency than in some agencies, is that the aggrieved party
can just sit and wait, incapable perhaps of finding any good grounds to
present to the court, in petition for review. Notwithstanding that he
just sits there and waits and raises no objections, we must go through a
long and involved court proceeding in the circuit court of appeals to
establish the validity of our order." (Hearings, p. 1056)

REC. 10. REVIEW OF NLRB ORDERS 257

Stuart Roth man, General Counsel of the NLRB :

"I believe there is merit in the suggestion that the Board's unfair labor
practice orders should be 'self-enforcing.' Under the present statutory
scheme a Board order carries no sanctions until or unless it is enforced
by a court decree. It has been said that the long — and frequently un-
avoidable delay — between a Board decision and effective judicial decree
enforcing that order has militated against effective enforcement of the
Congressional policy in this area. To some extent at least this situation
might be remedied by providing that a Board order shall become final
unless within a specified time, say 60 days, the party against whom the
order is directed petitions for judicial review. Absent such a petition
timely filed, a decree should be entered enforcing the Board's order upon
the Board's application for summary judgment." (Hearings, pp. 1108-9)

"I favor the proposal such as that made by the Cox committee, and
reiterate it, in effect, in my prepared testimony. To make the Board
order self-executing would be helpful. I should point out that there are
other reasons why some of these cases that you refer to, and I don't
know the particular ones, may appear to have taken longer than they
should have. In some of these cases I believe that it is the situation that
they have taken longer than they should have. But there may be a period,
of course, after the Board has issued its order where the regional office
seeks to achieve voluntary compliance and watches the matter to see
whether or not the respondent comes into compliance. And then there
may be, by reason of the facts and circumstances of the particular case,
some reason why it takes longer in one case than in another. There may
be representations which have been accepted that the order would be
complied with voluntarily. So there may be instances where a case has
taken longer than it should.

"It may be in such a case that the regional office and ourselves should
have moved a little more rapidly than it has, to bring about enforce-
ment. But in answer to your question, I support the idea of making
Board orders self-enforcing." (Hearings, p. 1310)

Frank W. McCulloch, present chairman of the NLRB :

"I am quite ready to record my support for the suggestions that have
been made about the possibility of amending the law to make the Board
orders self-enforcing after a reasonable period for the filing of a petition
for review by the respondents, and upon failure to so file, going into
court, making the Board's orders self-enforcing, somewhat along the
same line as has been done by the Federal Trade Commission." (Hear-
ings, p. 1536)

Gerald D. Reilly, former member of the NLRB, now an
attorney representing employers, and a member of the "Cox
panel":

"If the legislation recommended by the Advisory Panel were adopted,
all Board orders would automatically be filed for enforcement in the
courts of appeals and would become final unless a petition for review by
a party aggrieved was filed within 30 days.

"The purpose of this provision is to avoid the long delays which now
occur between a final order of the Board and the docketing of a petition

258 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES

for enforcement in the courts of appeals. It would also place the burden
of obtaining review upon the losing party." (Hearings, p. 766)

Guy Farmer, former chairman of the NLRB, now an attorney
representing employers, and a member of the "Cox Panel" made
the joint statement with a fellow panel-member, Louis Sherman,
who represents unions, which the Subcommittee quoted in its
report and recommendations. In addition, the following colloquy
occurred :

Mr. Pucinski: "This is a procedure followed in other agencies now,
isn't it?

Mr. Farmer: "The Federal Trade Commission is one agency that fol-
lows this procedure."

Mr. Pucinski: "And it could apply in labor-management relations, in
your opinion?"

Mr. Farmer: "I see no reason why it should not. Sometimes in the
past, the Board for one reason or another, and perhaps because of work-
load problems, there will be a great delay in filing a petition for review
and the case is sort of left hanging there." (Hearings, p. 843)

IV. Analysis of Probable Effect of the Cox Panel Proposal

The objective would be to reduce the time within which an
effective order can be obtained. Under the Cox Panel proposal,
this would be accomplished by the Board order becoming an
order of the Court of Appeals within 45 days, unless the respon-
dent has petitioned for review within that time.

The time periods which elapse under the present system during
various stages of the enforcement procedure are revealed in the
following statistics which have been supplied by Marcel Mallet-
Prevost, Assistant General Counsel of the NLRB.

Computation of days involved in case processing —

The following information has been compiled from the files of the
Appellate Court Branch. Both the average and median number of days
are indicated.^

Number of days from issuance of Board's Decision and Order to referral
of case to General Counsel for enforcement

Fiscal 1959 Fiscal 1960 Fiscal 1961

Average 62.0 69.8 58.2

Median 35.8 43.0 37.9

' Averages are obtained by dividing the total number of days involved in all the cases by the
number of cases. Median figures indicate that fifty percent of the cases have longer time pe-
riods than the median and fifty percent have shorter time periods.

REC. 10. REVIEW OF NLRB ORDERS 259

Number of days from referral for enforccmevt itnfil petition filed with

Coierts of Appeal

Rppfular plus
Regular cases suspended cases

Fiscal 1959

Average 74.3 81.8

Median 67.5 69.4

Fiscal 1960

Average 76.6 82.9

Median 69.6 70.8

Fiscal 1961

Average 44.8 51.0

Median 44.0 46.8

Action on cases after referral is sometimes suspended for various
reasons, such as, to allow the Regional Office time to negotiate com-
pliance of settlement, or to refer the case to the Board for further con-
sideration. This delays the filing of the petition. In 1961 there were 16
such cases out of a total of 153 enforcement referrals. Accordingly, the
"Regular Cases" column more accurately reflects the flow of work.

Number of days from filing of petition to decision by Courts of Appeal

Average
Median

iscal 1959

Fiscal 1960

Fiscal 1961

250.9

261.4

313.0

236.7

262.5

240.5

Speaking in very round figures, it takes about 50 days from
the date of the Board's order to the date when the case is referred
to the General Counsel for enforcement. Again in very round
terms, it takes another 50 days until a petition for enforcement
is filed, or a total of 100 days before the average case reaches
the Court of Appeals. The Cox Panel proposal would reduce this
to 30 days, and if the respondent did not petition for review
within an additional 15 days, the Board order would become
the order of the Court, Of course, if the respondent does petition
for review, the present proposal would not affect the amount of
time that is consumed in trying the case in the Court of Appeals —
roughly 250 days.

The principal effect of the proposal would be to require the
respondent to make up his mind promptly whether to seek review.
It would probably assist in achieving compliance with the orders
of the Board by putting pressure on the respondent to reach this
decision. As indicated in the testimony before the Pucinski
Subcommittee, there is reason to believe that in a substantial
number of cases, the respondent delays compliance while the

■Compliance before
CA decision:

Percent

16.7

23.6

260 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES

Board is going through the rather slow process of seeking an
enforcement order. The following figures, supplied by Marcel
Mallet-Provost, Assistant General Counsel of the NLRB, seem to
bear that conclusion out.

Cases in which respondent complied after referral to General Counsel for
enforceynent and before Court of Appeals decision

Fiscal year Referred

1959 155

1960 197

1961 222

1962 305

According to Mr. Mallet-Provost, most of the cases of compli-
ance occurred after the petition for enforcement was filed with
the Court of Appeals and sometimes after the Board's brief was
filed.

One of the principal advantages under the proposed procedure
would be the saving of time and effort on the part of the Board's
attorneys in this type of case. Where the Board seeks the en-
forcement order, it must prepare a brief justifying the Board
position on points which may not be contested by the respondent.
Putting the burden on the respondent to seek review would have
the advantage of focusing attention on the particular points
which he wants to contest.

It is not believed that the proposed procedure would shift the
"burden of proof" before the Court of Appeals. Whether the
respondent is petitioning for review or the Board is petitioning
for an enforcement order, the statutory test of "substantial
evidence on the record considered as a whole" would apply in
either situation.

The proposed procedure would not appear to create difficulties
with respect to back pay proceedings. Even where the order of
the Board becomes the order of the Court after 45 days, later
controversies over the amount of backpay due can be handled in
the present manner by filing a motion with the court asking
that it direct the party objecting to the backpay award to indi-
cate its grounds for stating that the Court's decree should not
be amended to include the amounts of backpay the Board has
found due. (See Mr. Manoli's summary of this procedure, supra,
p. 6.)

The proposed procedure would have a salutary effect upon
compliance discussions in the Regional Offices. These have a

REC. 10. REVIEW OF NLRB ORDERS 261

tendency to become lon^ and drawn-out, and the 30-i)lus-l 5-day
provisions for the Board's order to become an effective order of
the Court would speed them up. Of course, the respondent retains
the full ri^ht of judicial review, but if he wishes to challenge
the Board order, he must take the responsibility of .seeking the
review. It should be noted that respondents frequently petition
for review under present procedures, particularly where some
choice as to the Circuit is involved. Out of 97 briefs filed by the
Appellate Court Branch in the Courts of Appeals in fiscal year
1960, for example, 23 were on an aggrieved person's petition
for review, as distinguished from a petition by the Board for an
enforcement order.

V. Comparison with Enforcement Procedures of the
Federal Trade Commission

At the time when the National Labor Relations Act was passed
in 1935 the statutes governing the work of the Federal Trade
Commission required the F.T.C. to obtain an enforcement order
from the Court of Appeals before its orders carried any sanction.

However, the Federal Trade Commission Act was amended in
1938 and the Clayton Act was amended in 1959 so as to make
F.T.C. orders "self-enforcing." At the present time, a cease and
desist order becomes final 60 days after date of service upon the
respondent, unless within that period the respondent petitions
an appropriate Court of Appeals for review. In case of review,
the F.T.C. order becomes final after affirmance by the Court of
Appeals. Violation of a cease and desist order after it becomes
final subjects the offender to suit brought by the Department of
Justice in a U.S. District Court for recovery of a civil penalty
of not more than $5,000 for each violation. In the case of a con-
tinuing violation, each day of its continuance is a separate of-
fense. Violation of an F.T.C. order which has been affirmed by
a decree of a Court of Appeals makes the respondent further
vulnerable to contempt proceedings in that court.

Thus, while the NLRB proposal recommended by the Cox
Panel and the Puccinski Subcommittee is "adapted from" the
current F.T.C. procedures, there are substantial differences. The
NLRB proposal would rely on making an NLRB order become
an order of the Court of Appeals within 45 days, in the absence
of a petition for review by an aggrieved person, and thus subject
to the ultimate contempt-of-court sanction. The Cox proposal
would not make the NLRB order itself "final" in the sense of
carrying a civil penalty sanction.

262 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES

Apparently the enforcement procedures at the F.T.C. were
more attenuated, prior to the 1938 and 1959 amendments, than at
the NLRB, as is indicated by the legislative history of the 1959
amendments. The situation under the F.T.C. Act and the Clayton
Act was thoroughly described by Sigurd Anderson, member of
the F.T.C. :

Under both acts (the Federal Trade Commission Act and the Clayton
Act), the Commission must investigate and, after complaint, prove on the
record developed during hearings violations of the act before orders to
cease and desist may issue. Although the two acts, as originally enacted,
contained similar provisions for the enforcement of such orders, Con-
gress, on the occasion of the passage in 1938 of the Wheeler-Lea amend-
ment to the Federal Trade Commission Act, provided for the finality of
orders issued under that act. As stated by the House Committee on In-
terstate and Foreign Commerce at page 4 of report No. 1613, 75th Con-
gress, 1st session, on S. 1077:

The provisions of subsections (g) to (k) of section 5, inclusive, are
for the purpose of making definite and certain when the Commission's
orders to cease and desist become final, and are similar to those found
in the Revenue Act of 1926, fixing the time when the orders of the
Board of Tax appeals become final.

Under the Federal Trade Commission Act, by reason of the 1938 Wheeler-
Lea amendment, an order to cease and desist becomes final upon the ex-
piration of the time allowed for filing a petition for review, if no such
petition is filed within that time. Once an order has become final, the
Commission can certify the facts of a violation to the Attorney General
who may then proceed in an appropriate district court for the recovery
of civil penalties. In contrast, the Clayton Act contains no provision for
finality of the order and no procedure for the securing of civil penalties
for violations thereof.

Existing procedures under the Clayton Act are laborious, time consum-
ing, and expensive. After a Clayton Act order to cease and desist has
been issued, following investigation, complaint and proof of violation on
the record, the Commission must again investigate and again prove vio-
lations of the order and of the act before the Commission's order to cease
and desist. Only then, if the respondent violates the act a third time, by
virtue of being in contempt of court, does he become subject to penalty.
Thus, before a respondent can actually be punished for violation of the
Clayton Act, as amended by the Robinson-Patman Act, the Federal
Trade Commission must conduct three successive investigations and must
on three successive occasions prove violations of the law.

As the Clayton Act now stands, a person found to have violated that
act is not made subject to an effective order to cease and desist. The
original proceeding at Commission level is a preliminary skirmish pre-
requisite to the Commission's going to court with respect to a subsequent
violation. And it is only the court's order, issued after the subsequent
showing of violation, that compels obedience.

The effectiveness of the Clayton Act has long been handicapped by the
absence of adequate enforcement provisions. The proposed legislation

REC. 10. REVIEW OF NLRB ORDERS 263

would fill this enforcement void. The need for the amendatory legislation
became even more pressing in 1952 when the Supreme Court decided
Federal Trade Commission v. Ruheroid, 343 U.S. 470. Prior to that deci-
sion, the Commission proceeded for enforcement of Clayton Act orders by
cross-petition in cases where respondents had petitioned for review in the
U.S. courts of appeals. In Ruberoid, the Supreme Court held that the
courts were without authority to issue an order commending obedience to
an order of the Commission under the Clayton Act until the Commission
had established violations of its order. Commenting on this holding, Jus-
tice Jackson stated in dissent:

I see no real sense, when the case is already before the court and is
approved, in requiring one more violation before its obedience will be
made mandatory on pain of contempt. 343 U.S., at page 494.

It is indeed an anomaly that orders issued by the Commission in fur-
therance of the general proscriptions of the Federal Trade Commission
Act have finality, whereas orders issued following violations of the more
specific prohibitions of the Clayton Act do not. Not only is the present
situation anomalous, but the Clayton Act stands incomplete until such an
amendment as that proposed is enacted. The Commission believes that
proper implementation of an effective antitrust policy requires correction
of this situation.

The Commission has been aksed to comment on objections to the bills
contained in statements submitted by the American Bar Association and
the Association of the Bar of the city of New York.

The American Bar Association has characterized the Commission's po-
sition of favoring the legislation as simply a plea for uniformity of en-
forcement procedure for Commission orders, whether issued under the
Clayton Act or the Federal Trade Commission Act. We believe that this
contention has already been answered in the foregoing portion of this
statement where we have demonstrated that the proposed legislation is
required to provide compliance with an act which the Congress undoubt-
edly intended should be enforced.

Both bar associations stress an assumed "right" or a respondent not to
have to go to court as long as he is willing to comply with the order to
cease and desist which has been issued against him. This position totally
ignores the right and the interest of the public in having an effective
order outstanding against a law violator.

The Commission's order is issued in the course of an adjudicative pro-
ceeding wherein a respondent has been found to have violated a law en-
acted by the Congress. Provision should be made for the completion of
such an adjudication. The logical sequence of events should be that if a
respondent objects to a Commission order for any reason, he should ap-
peal to a court within a reasonable time so that the matter can be de-
cided once and for all. He should not be allowed to sit back, possibly for
years, and then not only contest the charges of a new violation, but be in
a position to challenge all of the aspects of the original case upon which
the Commission's order was based, as well as that order itself. Congress
has already expressed its disapproval of such a frustrating and compli-
cated procedure in its consideration and pass^age of the Wheeler-Lea
amendment to the Federal Trade Commission Act.

264 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES

The bar associations attempt to buttress their argument by making a
general attack upon the breadth of the Commission's Clayton Act orders.
This attempt confuses the problem of drafting appropriate orders in
particular cases with the questions of whether orders should be made
final. There is no relevancy between the two subjects. No one would sug-
gest that courts be deprived of their injunctive powers because of a dis-
agreement in a particular case with the specific order entered. And, in
any event, the proposed legislation provides for adequate court review of
Commission orders.

The Commission cannot discuss the question of the appropriate
breadth of orders in a vacuum. Suffice it to say that in the very case
relied upon by the American Bar Association in support of its argument,
Federal Trade Commission v. Ruberoid, 343 U.S. 470, the majority of the
Court decided that the Commission was justified in issuing the order that
it did and upheld the court of appeals' affirmance of that order.

Whatever the challenge to a Commission order may be, the Commis-
sion feels that challenge should be raised in court within a reasona-
ble time after the Commission's adjudication, at which time all of the pro-
tections which the American Bar Association urges would be available to
the respondent.

Both bar associations oppose the proposed provision for civil penalty
of not more than $5,000 for each violation of the final order with each
day of a continuing violation being deemed a separate off'ense. They state
that the penalty is too severe and point to the fact that the majority of
penalties imposed under such a provision in the Federal Trade Commis-
sion Act have been for less than $1,000 per count.

The monetary and other economic interests involved in Clayton Act
proceedings are substantial and orders to cease and desist, though made
final, would be ineff'ective unless adequate civil penalties are provided.
Under the comparable provision in the Federal Trade Commission Act,
various penalties in excess of $1,000 per count have been imposed and
there have been three judgments, one by default, where full $5,000 pen-
alties for single violations were assessed. It can be assumed that in-
stances may also arise under the Clayton Act where violations will merit
the full $5,000 penalty or some figure in excess of $1,000.

In considering the possibility of the proposed provision constituting an
onerous burden upon respondents, it is important to recognize that the
$5,000 figure per violation is the maximum amount that may be imposed.
It is to be assumed that courts would, under the Clayton Act as they
have under Federal Trade Commission Act, exercise their judgment to
impose appropriate penalties. It is interesting to note the following dis-
cussion of penalty provisions by the House Committee on Interstate and
Foreign Commerce at the time it reported on the then proposed
Wheeler-Lea amendment to the Federal Trade Commission Act:

Subsection (1) provides that any person, partnership, or corporation
who fails to obey an order of the Commission to cease and desist after
it has become final, and while it is in effect, shall forfeit and pay to
the United States a civil penalty of not more than $5,000 for each
violation, which shall accrue to the United States and may be recov-
ered by a civil action brought by the United States. The object of the
provision is to enforce obedience to the Commission's orders to cease

REC. 10. REVIEW OF NLRB ORDERS

265

and desist after such orders have become final throup:h approval of
the courts or throuf^h the failure of respondents to seek review. Sim-
ilar provisions are contained in the Packers and Stockyards Act of
1921 (sec. 195, title 7, U.S.C.A.) and in the Securities Exchange
Act of 1934 (sec. 78y(a), title 15, U.S.C.A.) (Hearings on Finality
of Clayton Act Orders, before the Antitrust Subcommittee of the
Committee on the Judiciary, House of Representatives, 86th Con-
gress, First Session, May 27, 1959, pp. 17-20).

From 1938 to 1959, there were 92 cases under Section 5 of
the FTC Act in which civil penalties were assessed. The highest
single case penalty was $38,000, and the penalty in the great bulk
of the cases amounted to from $1,000 to $5,000. (See pp. 28-29
of the above House Judiciary Subcommittee Hearings for a com-
plete list) .

In the fiscal year of 1962, the amounts of civil penalties as-
sessed in FTC Act cases were as follows :

Docket

Name of Case

Court

Concluded

Judgment

6222

Vulcanized Rubber & Plastics
Company.

E.D. Pa.

10-9-61

$6,000

6086

Empire Press, Inc., et al

N.D. 111.

12-5-61

Injunction

6089

Personal Drug

E.D. N.Y.

12-8-61

$2,000-Inj.

5342

National Toilet Company

Tenn.

12-19-61

$5,000

6426

Sterling Materials Company,
Inc. et al.

E.D. N.Y.

2-6-62

$11,000

6426

Carbozite Protective Coatings

E.D. N.Y.

2-6-62

$11,000

6426

Ohmlac Paint & Refining
Company.

E.D. N.Y.

2-6-62

$6,000

6140

George's Radio & Television
Company.

D.C.

2-2-62

$6,000

5975

National Educators, Inc., et.

al.
Sun Vacuum Cleaner

D.C.

2-12-62

$8,000

6342

Md.

2-21-62

$3,000-Inj.

Company.

3964

Fong Wan, et al

N.D. Cal.

6-4-62

$1,300

3639

Parf ums Corday

S.D. N.Y.

6-6-62

$13,000

6916

Fire Safety Services, Inc.,
et al.

Md.

6-11-62

$28,000

6644

Magic Weave, Inc., et al.

Mass.

6-28-62

Injunction

(Supplied by Barry W. Stanley of F.T.C.)

It can be seen from these figures that the potentially high
$5000-a-day penalty has not, in practice, resulted in unconscion-
ably high penalties.

The processing of these civil penalty cases is slowed up and
the enforcement is made less eflScient than it could be by the
fact that the proceedings are brought by the various U.S. At-
torneys throughout the country. The extent to which the legal

266 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES

staff of the FTC participates in these cases varies considerably
among the offices of the U.S. Attorneys.

As to the experience under the 1959 "Finality" Amendments
to the Clayton Act, there is very little to date. Only two civil
penalty cases have been filed and they are still at the discovery
stage. {FTC v. Time Magazine and FTC v. Hearst, both in the
U.S. District Court for the Southern District of New York).
The lack of experience with the operation of the 1959 amend-
ments is largely due to the holding of the courts that the "Finality
Amendments" apply only to FTC orders under the Clayton Act
which became final after the effective date of the 1959 Amend-
ments. Thus if a respondent violates today an FTC order issued
before that effective date, the civil penalty provision does not
apply. See Sperry Rand Corp. v. FTC, 228 F.2d 403 (CADC,
1961).

One effect of the 1959 Amendments to the Clayton Act has
been to focus attention of the need for clear and precise cease
and desist orders where the respondent is vulnerable to civil
penalties. In FTC v. Henry Brock and Co., 82 Supp. Ct. 431, 436
(1962) , the U.S. Supreme Court stated :

We do not wish to be understood, however, as holding that the generalized
language of paragraph (2) (of the commission's order) would necessar-
ily withstand scrutiny under the 1959 amendments. The severity of possi-
ble penalties prescribed by the amendments for violations of orders which
have become final underlines the necessity for fashioning orders which
are, at the outset, sufficiently clear and precise to avoid raising serious
questions as to their meaning and application.

In summary, it is too early to assess the effects and workability
of the 1959 Amendments to the Clayton Act, but the similar
procedure of making orders final after a fixed period of time
under the 1938 Amendments to the FTC Act has worked fairly
well, and is certainly a considerable improvement over the pre-
existing system.

VI. Conclusion

Professor Leroy S. Merrifield, special consultant to the Com-
mittee on Judicial Review, has talked informally with Archibald
Cox, Russell Smith, and Guy Farmer. They do not recall the
precise source of the proposal within the Advisory Panel, but
Mr. Cox stated that it was obviously adapted from the Federal
Trade Commission procedure. Mr. Smith recalls that Arthur
Goldberg favored the proposal. There were no comprehensive
studies or memoranda prepared on the matter within the Panel.

REC. in. REVIEW OF NLRB ORDERS 267

Professor Merrifield has also talked informally with Stuart
Rothman, Dominick Manoli, Marcel Mallet-Provost, A. Norman
Somers and Melvin Welles at the NLRB, who are or have been
responsible for enforcement proceedings in the Courts of Appeal.
They all would favor the Cox Panel proposal.

The proposal appears to have attracted wide support from
Board members and officials and from reputable attorneys for
both management and labor. Opposition might come from those
employer interests who find it advantageous to seek delay. Unions
would probably be more inclined to favor it; the impact would
probably fall more on employers than on unions, since the
employers already have the benefit of "mandatory" injunctions
against the more important union unfair labor practices under
section 10(1) of the Act.

It is our conclusion that it is necessary to eliminate delay
wherever possible in NLRB procedure in order to have an ef-
fective law; that the proposal of the Advisory Panel headed by
Archibald Cox is basically sound and would result in an average
time saving of something like 55 days in getting an effective
order without foreclosing in any way a full opportunity for judi-
cial review.

RECOMMENDATION NO. 11

PUBLICATION OF A "GUIDE TO FEDERAL REPORTING

REQUIREMENTS"

RECOMMENDATION

2. After consultation with the Bureau of the Budget, the
Director of the Federal Register should prescribe the style,
coverage, and submission of such digests, and should publish the
overall "Guide to Federal Reporting Requirements" in the Fed-
eral Register in the same manner used for the publication of
the "Guide to Record Retention Requirements."

268

REPORT OF THE COMMITTEE ON INFORMATION, EDU-
CATION, AND REPORTS IN SUPPORT OF RECOMMEN-
DATION NO. 11

The idea of compiling a guide to reporting requirements was
born at the time the guide to record retention requirements
was being planned in 1955. At that time it appeared wise to let
compliance with the Federal Reports Act, as amended (44 U.S.C.
3501-3511) mature over a longer period before undertaking such
compilation.

The success of the annual Guide to Record Retention Require-
ments has been notable. The time now seems right to bring out
the companion piece covering reporting requirements.

Annual distribution of the Guide to Reco7^d Retention Re-
quirements has gone over 57,000 copies, of which about 51,000
represent paid mail orders. This clearly demonstrates a public
need. Even more remarkable is the collateral salutary effect of
presenting the requirements in one concise package. Official and
private comparison resulted in self criticism and a marked tend-
ency to imitate the best examples demonstrated by the Guide.

There would seem to be every reason to believe that a guide
to reporting requirements will be equally popular, and that visual
proximity will lead to corresponding improvements by way of
imitation of the best examples.

The format of the proposed guide to reporting requirements
and the matters of printing and distribution would follow closely
the example of the Guide to Record Retentio7i. Because of dif-
ferences in the statutory provisions, the procedures and stand-
ards governing compilation and coverage would be somewhat
different.

Under the provisions of 44 U.S.C. 3501-3511, the Bureau of
the Budget has primary responsibility for administering the
matter of Federal reporting requirements. The coverage of the
guide will be limited by the terms of the statute and of the
decisions and rules issued by the Director of the Bureau of the
Budget. (See BOB Circular A-40, revised February 12, 1968.

With these considerations in mind, the Committee submits
that the proposed "Guide to Federal Reporting Requirements"
will (1) make important information more readily and authori-

269

270 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES

tatively available to the public; (2) tend to improve the fairness
and uniformity of reporting requirements; and (3) assist the
Bureau of the Budget in controlling compliance w^ith the perti-
nent statutory provisions.

The following is offered as an example of a potential entry in
the guide :

XVII. Federal Trade Commission

1. Export trade associations. Statement setting forth location
of offices, names and addresses of officers, stockholders, and mem-
bers, together with copies of certificates or articles of incorpora-
tion and bylaws, or copies of articles or contract of association.

Timing: Within 30 days after the association's creation and on
January 1 of each year thereafter. 15 U.S.C. 65

RECOMMENDATION NO. 12

ANALYTICAL SUBJECT-INDEXES TO SELECTED VOL-
UMES OF THE CODE OF FEDERAL REGULATIONS

Currently the Code of Federal Regulations is updated annu-
ally by the issuance of some 112 revised books. Many of these
books are self-indexing. The usefulness of some books may be
greatly impaired by the lack of an analytical subject index.

RECOMMENDATION

2. The Office of the Federal Register should review proffered
indexes and arrange for the publication of those that appear to
be professionally adequate.

271

REPORT OF THE COMMITTEE ON INFORMATION, EDU-
CATION, AND REPORTS IN SUPPORT OF RECOMMEN-
DATION NO. 12

The general and permanent rules of Federal agencies are
codified in the Code of Federal Regulations under functional
titles which represent broad subject areas. This orderly arrange-
ment is somewhat self-indexing. At the beginning of each book
there is a contents listing which gives the user an overall view
of the subject coverage, and within each book there are listings
of the headings of the various sections included. As an additional
retrieval aid, a general subject guide called the CFR Index is
published separately and revised each year.

The CFR Index, however, is not a detailed analysis of the
provisions in the Code. Rather, it serves as a general guide to
regulatory areas. While this may be adequate for much of the
Code, some individual volumes appear to need analytical subject
mdexes because of the nature of the material covered. The ad-
ministering agency may be the only source of the technical
program knowledge needed to prepare an in-depth analysis by
subject matter.

Some agencies prepare subject indexes to their own regula-
tions for in-office convenience and for separate publication. These
might be adapted for use in the Code with little change. One
example is already available. Title 35 of the Code of Federal
Regulations contains a detailed subject index to the Canal Zone
Regulations which was prepared by the agency and now is
carried in the CFR under arrangement with the Office of the
Federal Register.

All agencies covered by 5 U.S.C 552 should evaluate their
regulations as published in the CFR to determine whether de-
sirable assistance can be given to the public by the inclusion in
the CFR of a comprehensive subject index to any given book.
When such index appears warranted, the agency should prepare
it for transmittal to the Office of the Federal Register for publi-
cation as part of the book involved.

272

RECOMMENDATION NO. 13

ELIMINATION OF DUPLICATIVE HEARINGS IN FAA
SAFETY DE-CERTIFICATION CASES.

RECOMMENDATION

The Federal Aviation Administrator has authority to revoke
or suspend the licenses of aviation personnel and training facili-
ties, airv^orthiness certificates, and other permits related to the
operation of aircraft. Present procedures contemplate a full trial-
type hearing, if one is desired by the respondent, before the
Administrator issues an order of suspension or revocation. If
an appeal is taken from that order, a second full hearing is
afforded by the National Transportation Safety Board. This is
wasteful of time and personnel, and is unnecessary as a pro-
tection of affected parties.

In order to expedite proceedings bearing directly on public
safety, without sacrificing the interests of individual respondents,
the Federal Aviation Administrator should discontinue providing
hearings in the nature of trials in "certificate actions." This will
not result in "punishment before trial," since the effective date
of a certificate action order is invariably postponed, except in
emergency situations, pending the outcome of proceedings before
the National Transportation Safety Board.

273

REPORT OF THE OFFICE OF THE CHAIRMAN IN
SUPPORT OF RECOMMENDATION NO. 13

Prepared by

David E. Kartalia

Staff Attorney

I. Scope and Background

Under Title VI of the Federal Aviation Act of 1958,^ the
Administrator of the Federal Aviation Agency may issue and
"amend, modify, suspend, or revoke" a variety of air safety
certificates. This report deals with the procedure in formal de-
certification cases, i.e., actions to amend, modify, suspend, or
revoke outstanding certificates. As discussed more fully in Part
II below, this procedure is of particular interest because it per-
mits a single case to be tried twice at the administrative level.

The certificates subject to this de-certification, or "certificate
action," process fall into seven statutory categories.- Certificate
of the first two categories known as "type" and "production"
certificates respectively, evidence the Administrator's satisfac-
tion that the interests of safety have been adequately protected
in the development and production of aircraft and aircraft com-
ponents. "Airworthiness certificates," a self-explanatory term,
are the third category of certificates; these are issued to regis-
tered owners of aircraft. "Air carrier operating certificates," the
fourth category, should not be confused with certificates of air
carrier route authority issued by the Civil Aeronautics Board;
the FAA certificates relate only to the safety aspects of an air
carrier's enterprise. The fifth category, "airman certificates," is,
for reasons stated below, the most important category so far as
this study is concerned. These certificates license the activities
of pilots and other flight crew members, flight instructors, air-
craft mechanics, dispatchers, control-tower operators, and even
parachute riggers. The sixth category of certificates attests to

M9 U.S.C. §§ 1421-30 (1964).

2 See 14 U.S.C. §§ 1422-24 and 1426-27 (1964).

274

REC. 18. FAA SAFETY HEARINGS 275

the suitability of "air navigation facilities." Finally, the seventh
category, "air agency certificates," involves judgments as to the
adequacy of training schools, repair stations, and so forth.

Although the process under examination applies to all of the
foregoing certificates, the practical significance of the process
is much more limited. The respondent in a formal certificate
action proceeding is almost always an airman, and usually a
pilot. The experience of the FAA's hearing officers during fiscal
years 1967 and 1968 illustrates the pattern just described. Out
of 227 ne-w cases received by the hearing officers in that 24-
month period, 226 involved airman certificates; and of those
226 cases, 203 involved pilots' licenses. The balance of 23 was
distributed among mechanics (20), flight engineers (2), and
flight navigators (1).^ For the sake of convenience, and in rec-
ognition of the predominant impact of the formal certificate
action process, this report occasionally refers to the respondent
in a certificate action case as "the pilot."

Although certificate action cases have been characterized as
"remedial," they are generally punitive in the sense that a sanc-
tion is sought to be imposed because of alleged improper con-
duct. The typical case involves a pilot who is accused of violating
one of the FAA's flight regulations. Similarly, mechanics usually
become involved in the process upon being accused of not meet-
ing applicable Agency standards in the performance of specified
repair, maintenance or inspection work.

The Federal Aviation Agency closes well over 1,000 certificate
action cases each year. In most of these cases the respondent
ultimately surrenders his certificate without receiving a formal
hearing. The cases which are closed after formal adjudicatory
proceedings account for only 10 to 20% of the total. ^

Certificate action is only one of two sanctions available to the
Administrator in the conduct of his air safety enforcement pro-
gram. The other sanction is the monetary fine, or "civil penalty." '
Although the Administrator's civil penalty power is used ex-
tensively, the applicable procedure is entirely different from that
in certificate action cases and is, therefore, excluded from the
scope of this report. Civil penalty cases are either compromised
informally or referred by the FAA to the Department of Justice
for collection in court."

^ Source : FAA docket sheets.

* See note 19 infra.

«49 U.S.C. § 1471(a)(1) (1964).

«49 U.S.C. §§ 1471(a)(2), 1474(b)(1) (1964).

276 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES

II. The Problem

A pilot who is confronted with proposed certificate action
enjoys a procedural option which fairly invites inquiry. In brief,
the pilot may elect to go to trial upon the decidedly favorable
principle, "Heads I win, tails we flip again." To take advantage
of this opportunity, the pilot must request the "formal hearing"
proffered by the Administrator's Notice of Proposed Certificate
Action, This hearing will be conducted before an FAA "hearing
ofl[icer" under procedural rules which provide for the essential
trappings of a trial." Accordingly, the burden of proof will be
on the Administrator rather than the pilot.^

If the airman prevails at the FAA trial, the action is termi-
nated. His adversary, the agency enforcement staff, has no re-
course, because the Administrator has granted the hearing of-
ficers the power to decide certificate action cases in his name
and stead. ^ But the pilot, on the other hand, is in no respect
bound by an adverse decision of the FAA hearing officer. He may
"appeal" his case to the National Transportation Safety Board
and there receive a trial de novo before one of the Board's APA
hearing examiners.^" As before, the FAA staff will carry the
burden of proof."

The second trial in a certificate action case is usually a trial
de novo in the literal sense of that term. That is, the findings
of the FAA hearing officer and the record compiled before him
are simply ignored in the second proceeding. In a few cases,
the respondent has entered into a stipulation permitting all or
part of the FAA record to be introduced into evidence before
the NTSB examiner, but such action is not at all common. Thus,
from the perspective of parties who are retrying a certificate
case before a Board examiner, the FAA trial was a trial in name
only; in retrospect, it was more a combination dress rehearsal
and deposition session.

This procedure was described above as an option of the pilot.
The characterization is appropriate because the pilot need not
exhaust any FAA remedy before taking his case to the NTSB.
He may simply avoid any dealings with the FAA, allow the
proposed certificate action to ripen into final action, and then
file his appeal with the NTSB. He may also file an appeal after

' 14 C.F.R. §§ 13.31-67.
«14 C.F.R. § 13.59(b).

"14 C.F.R. § 13.67(a). However, the hearing officer may not impose a sanction more severe
than that specified in the notice of proposed certificate action.
'"See 14 C.F.R. §§ 421.21-.50.
" 14 C.F.R. § 421.22.

REC. 13. FAA SAFETY HEARINGS 277

taking advantag'e of the FAA's informal remedial procedures.
Under FAA rules, each recipient of a Notice of Proposed Certi-
ficate Action is to be offered an opportunity to answer the charges
in writing or to be heard in informal conference with FAA
counsel.

Approximately 100 cases per year are appealed to the NTSB
without passing through the FAA formal hearing process.'- This
number does, however, include so-called "emergency appeals."
Emergency cases are those in which the Administrator has
chosen to exercise his statutory power to make his order effective
pendente lite. Such cases are not subject to the FAA formal
hearing procedures; if contested, they go directly to the NTSB.
An idea of the frequency of emergency appeals can be obtained
from the fact that the Board disposed of 23 such cases during
fiscal 1969. It is thus clear that airmen do not invariably take
advantage of the two-trial process when it is available. Appar-
ently, a significant number sacrifice this additional protection
for the more expeditious direct appeal to the Board.

A study of cases docketed by FAA hearing officers during
the 24-month period ending on June 30, 1968, disclosed that
hearing officer decisions are appealed with some degree of reg-
ularity. The flow of cases between FAA hearing officers and
NTSB examiners is not patently alarming, but neither is it de
7ninimis. To illustrate, the FAA hearing officers received 227
cases during the subject period, and ultimately issued appealable
orders (i.e., imposed certificate action) in 131 of them. A total
of 51 were subsequently re-tried before the NTSB. In terms of
an absolute number, this suggests an average of 25 cases moving
each year to the NTSB for a second trial. In terms of percentages,
it suggests that about 22% (51/227) of all new cases, and
about 39% (51/131) of all appealable cases, are in fact tried
twice.

These figures demonstrate that a respectable amount of gov-
ernmental energy is dissipated by reason of the two-trial feature
of the certificate action process. The question, of course, is
whether it is not avoidable. It is certainly a basic assumption of
our legal system that a defendant can be accorded "justice" in
an adjudicatory system based on but one trial. Fortunately, the
certificate action process does not force us to re-examine this
assumption. The history of that system, as set forth in parts
III and IV below, shows that the two-trial feature exists more
through sufferance than design.

^ According to statistics supplied by the FAA for fiscal years 1966, 1967 anil 1968.

278 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES

III. Certificate Action: The Statutory Framework

Section 609 of the 1958 Act^"* prescribes certain procedures
for certificate action cases. Except in "emergency" cases, the
Administrator is required by Section 609 to initiate a certificate
action case by advising the certificate holder of the proposed
action and the basis therefor. The Administrator must then
afford the holder "an opportunity to ansv^er any charges and be
heard as to v^^hy [his] certificate should not be amended, modi-
fied, suspended, or revoked." Thereafter, if the Administrator
determines that "safety in air commerce or air transportation
and the public interest" so requires, he may put his proposed
action into effect.

Section 609 also provides that any certificate action order may
be appealed to the National Transportation Safety Board, v^^hich,
"after notice and hearing", may "amend, modify or reverse the
Administrator's order." The Board, in the conduct of its hearing,
is not "bound by the findings of fact of the Administrator."
The Board's decisional touchstone is, like the Administrator's,
phrased in terms of the requirements of "safety in air commerce
or air transportation and the public interest.

Emergency cases, as heretofore noted, are cases in v^^hich the
Administrator determines that his order should be effective im-
mediately. In all others the filing of an appeal v^^ith the Board
stays the eflfective date of the Administrator's order. The Ad-
ministrator may also determine that an emergency exists after
an appeal has been filed. In such a case, the statutory stay is
superseded by the Administrator's determination. Under Section
609, the Board must dispose of an emergency appeal within sixty
days after it is advised by the Administrator that an emergency
exists.

That Congress, in passing Section 609, foresaw only one formal
hearing in a certificate action case is hardly open to debate.
This is to say there is significance in the fact that the section
characterizes the requisite Board procedure as a "hearing" and
the FAA procedure as only "an opportunity to be heard as to
why," etc. The House committee report described Section 609
procedure as follows :

When the Administrator revokes, modifies, or suspends a certificate
under section 609, an appeal to the Board is provided.

In order to expedite the safety enforcement process, section 609 of the
legislation changes the present law by permitting the Administrator to
amend, modify, suspend, or revoke safety certificates prior to formal pro-

"14 U.S.C. 1429 (1964).

REC. 13. FAA SAFETY HEARINGS 279

ceedings before the Civil Aeronautics Board. However, in order to pro-
tect the holder.s of certificates from arbitrary action, the Administrator
is required, except in cases of emergency, before taking any action to ad-
vise the holder of the certificate of the nature of the charges against him
and to give the holder an opportunity to present informally his defenses
to the Administrator. If, after this informal presentation, the Adminis-
trator is still of the opinion that the certificate should be amended, modi-
fied, suspended, or revoked, the Administrator may take such action.
Thereafter, if the holder of the certificate disagrees with the action of
the Administrator, he may appeal to the Civil Aeronautics Board where
he will be given a full hearing complying in all respects with the require-
ments of the Administrative Procedure Act. In this hearing before the
Board, the Administrator will have the normal burden of proof to estab-
lish facts, justifying the amendment, modification, suspension or revoca-
tion of the certificate."

To summarize the two salient points in this passage, the FAA
procedure was seen as an informal conference, while the Board
procedure was to be a formal adjudicatory hearing.

From 1958, when the FAA was created, until 1962, the pro-
cedure in certificate action cases conformed to the expectations
of the framers of Section 609. The Administrator offered only
an informal conference to the recipient of a Notice of Proposed
Certificate Action/^

IV. "Project Tightrope" and the Introduction of the

FAA Trial

The present two-trial system dates from 1962, when the FAA
trial was introduced through an exercise of the Administrator's
rulemaking authority. This action was taken, quite clearly, to
implement the recommendation of an independent advisory group
which is usually referred to by its code name, "Project Tight-
rope."

Project Tightrope was set in motion by Najeeb Halaby shortly
after he became Administrator in 1961. Administrator Halaby
appointed a panel of six prominent lawyers and commissioned
them to study possible improvements in the Agency's rulemaking
and enforcement procedures. This was done against a background
of sometimes recriminatory relations between Mr. Halaby's pred-
ecessor and the FAA's "public." The prior Administrator had
also made the enforcement process particularly visible to the

"House Report No. 2360, 85th Congress, 2nd Session (1958), p. 8. The Senate report con-
tains similar language. See S. Rep. No. 1811, 85th Cong., 2nd Sess. (1958), p. 11.

"Report on Rulemaking and Enforcement Procedures: Project Tightrope (October, 1961),
p. 12. A copy of this report is available in the library of the FAA.

280 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES

aviation public by maintaining an "enforcement crackdown" be-
tween March 1959 and November 1960.^"

Project Tightrope submitted its final report to Administrator
Halaby in October 1961.^" In addition to a number of recom-
mendations concerning rulemaking and investigative procedures
which are not pertinent to the present discussion, the report
contained what amounts to a condemnation of the enforcement
scheme authorized by Section 609. The power to punish sum-
marily, with justification to be made — if at all — at a subsequent
trial, reminded the panel of the Queen of Hearts' edict: "Sen-
tence first — verdict afterwards." It was, they said, simply "too
much power for the Administrator to want or to wield." In sup-
port of this conclusion the report offers the following concisely
stated arguments :

The present right of a disciplined airman to secure a de novo review
from the CAB is, in our judgment, not equal to nor a proper substitute
for a trial type hearing in advance of punishment. It puts the burden of
moving forward on the wrong person. Anyone familiar with the problem
of a citizen confronted by his Federal Government will appreciate that
the whereabouts of the burden of moving forward is not an idle philo-
sophical inquiry.

Furthermore we are convinced — without being able to supply proof —
that enforcement officials who know, as FAA officials know, that in only
about 10 percent of their certificate cases will they have to present for-
mal proof, and that the painstaking accumulation of relevant, reliable,
probative and admissible evidence need be begun only when the accused
appeals to the CAB, cannot have the same attitude, and the same scrupu-
lous care in accumulating all the facts, which we always hope to find in
those prosecutors who must be prepared to prove every charge before an
independent tribunal.

Finally, apart from its effect on substantive justice in particular cases,
we believe that a procedure open to characterization as "punishment
first, trial later" destroys the appearance of fairness that is so vital to
public acceptance of any governmental regulation and enforcement
system.

As a substitute for summary punishment, Project Tightrope
recommended that the Administrator establish a corps of in-
dependent hearing examiners to hear and decide certificate action
cases. The Administrator's Section 609 powers, with the excep-
tion of his emergency suspension power, were to be delegated to
the presiding examiner "subject to [the Administrator's] per-
sonal review in cases where a severe punishment — such as rev-
ocation of a certificate — has been imposed." Cases were to be
initiated, as in the past, by the Administrator's Notice of Pro-

" Report, Project Tightrope, supra note 15, p. 13.

'^Report, Project Tightrope, supra note 15. See, in particular, pp. 18-21.

REC. 13. FAA SAFETY HEARINGS 281

I)Osed Certificate Action, except that the Tightrope-desip:ned
notice would advise the respondent of his right to an FAA trial.
A failure to accept the "proffered hearing" within a specified
period would operate as a default and the Administrator would
then take the proposed action.

The Tightrope report acknowledged and dismissed two objec-
tions to this proposal: (1) that the 1958 act did not provide
for formal hearings before the FAA; and (2) that some cases
might be tried twice, since "those who demand a separate evi-
dentiary hearing before the CAB may be legally entitled to it
under the present statute." As to the first point, the group as-
sured the Administrator that "since the provision of a hearing
within the FAA increases rather than decreases the rights of
the accused and appears to be well within the powers of the
Administrator, it could hardly be subject to legal attack."

With regard to the second anticipated objection, the group
indicated its disapproval of a two-trial system and suggested
that it would be desirable to convert the Board trial into an
appellate-type proceeding. In fact, the report recommended an
amendment to Section 609 which would give the Board "dis-
cretionary power to decide whether the taking of more evidence
is required." The recommendation was stated rather weakly,
however, since the group was unwilling to say that the same
result could not be achieved under the existing statute by unilat-
eral action of the Board. Also tending to weaken the recom-
mendation was an expressed willingness to accept a two-trial
system, if necessary, as the price of an urgently needed reform.
The group thought it probable that the twice-tried case would be
an "infrequent" phenomenon in any event.

Early in 1962 the FAA implemented the essential features
of the Tightrope recommendation. Apparently, however, the
Agency never proposed an amendment to Section 609 along the
lines suggested in the report.

V. Eliminating the Two-Trial Problem

The best way to eliminate the two-trial problem in the certifi-
cate action process is to eliminate the FAA trial. The Ad-
ministrator could do so simply by amending the agency's rules
of procedure. There would be no need to seek enabling legislation,
for Section 609 does not require the Administrator to provide
anything more elaborate than an informal conference. On the
other hand, it would be necessary to amend Section 609 in order
to solve the two-trial problem by making Board procedure basic-

282 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES

ally appellate in character. The language of that Section, supple-
mented by unambiguous statements in the pertinent Congres-
sional committee reports, leaves little room to doubt that the
NTSB hearing must be a trial.

Of course, mere ease of implementation would be a poor sub-
stitute for a sound result. But eliminating the FAA trial has,
in addition, an important substantive advantage over changing
the present Board procedure. The NTSB has an attractive degree
of independence from the FAA even though both agencies are
administrative units of the Department of Transportation. This
fact should enure to the benefit of the Board's examiners pre-
siding in certificate action cases, adding strength to their claim
of neutrality as between certificate holders and the FAA staff.
Moreover, because Board examiners are already experienced in
certificate action cases this neutrality does not have to be bought
at the price of competence.

"Punishment first, trial later" need not be the result of doing
away with the FAA trial. Under Section 609 the filing of an
appeal with the NTSB (which may be accomplished by a simple
letter under Board rules) ^^ stays the FAA certificate action order
during the pendency of the appeal. Thus, actual punishment is
possible only in the period between the entry of the Adminis-
trator's order and the filing of the certificate holder's appeal.
But even this gap can be avoided by postponing the effective
date of the Administrator's order for a period of time sufficient
to permit the appeal to be filed. In fact, the FAA does provide
for such a postponement as a matter of standard procedure. If
this practice were to be continued after the elimination of the
FAA trial, it would be quite inaccurate to characterize the certifi-
cate action process as "punishment first, trial later."

However, the report of Project Tightrope correctly pointed
out that appearance of fairness is important in winning public
acceptance of an enforcement system. It is therefore undesirable,
as the report again makes clear, for such a system to be open
to characterization as "punishment first, trial later." It would
seem, though, that the appearance of fairness problem would
be slight in this particular instance if the Agency properly in-
forms its regulated public. It is a question of telling respondents,
and also certificate holders in general, how the system actually
works.

A final matter of interest is the apparent expectation of the
Tightrope group that the implementation of its recommendations

14 C.F.R. § 421.21(a).

REC. 13. FAA SAFETY HEARINGS 283

would encourage many more certificate holders to insist on for-
mal hearings. This is certainly implicit in the group's argument,
quoted supra, to the effect that the enforcement officials of that
time lacked a strong incentive to investigate thoroughly, knowing,
as they did, that they would be put to proof in only 10% of their
cases. If the group did in fact expect to see a marked change in
the ratio of hearing to nonhearing cases, the expectation has
not materialized.'-' Discontinuing the FAA trial should not, there-
fore, have any great effect on that ratio either.

"For example, in fiscal year 1966 the FAA entered 1.471 certificate action orders, 82 of
which were entered after an FAA hearing. (1966 FAA Annual Report, p. 16). An additional
118 cases were appealed directly to the Civil Aeronautics Board. (Figure supplied informally by
FAA). Even assuming that all appealed cases were subse<iuently tried, the Agency was put to
proof in only 14% of the 1,471 cases.

RECOMMENDATION NO. 14

COMPILATION OF STATISTICS ON ADMINISTRATIVE
PROCEEDINGS BY FEDERAL DEPARTMENTS AND
AGENCIES

Government agencies which conduct formal or informal rule-
making proceedings or cases of adjudication which directly fix
the rights and obligations of private persons (hereafter referred
to as "proceedings")^ owe a special duty to the individuals
affected and to the general public to manage their caseloads as
efficiently as possible, to eliminate inordinate delays in the con-
duct of proceedings, and to work continuously toward improv-
ing the fairness, effectiveness, and economy of their procedures.
The present volume of Federal administrative proceedings is so
great that much of the basic information needed in these efforts
can be developed in intelligible and useful form only through
statistical study. The compilation and publication of comprehen-
sive statistics on Federal agency proceedings, at regular intervals
would :

— Provide each agency with information concerning its
business which would enable it to manage its caseload
more effectively,
— Augment generally the information concerning its activi-
ties which each agency must furnish to the President,
the Congress, and the public,
— Afford affected parties and their counsel a better under-
standing of the administrative processes which determine
their rights and obligations, and
— Provide a basis for specific study of particular agency pro-
cedures by the agency itself, by committees of Congress,
the Administrative Conference of the United States, the
organized bar, research scholars, and other individuals
and organizations, public and private, interested in im-
proving the Federal administrative process.

RECOMMENDATION

1. To the extent deemed useful to advance the purposes of this
recommendation, each Federal administrative agency which con-

^ The agency compilations proposed by this recommendation should not be limited to formal
proceedings, or limited to "proceedings" as that term has been employed in gathering statistics
for past conferences or Congressional groups. Rather, agency figures should report all matters
directly fixing the rights, privileges, and obligations of private interests including the routine
handling of applications and claims.

284

REC. 11. COMPILATION OF STATISTICS 285

ducts proceedings (as defined above) affecting private persons'
I'ights, privileges or obligations, should prepare annual statistical
data i)ertaining to those proceedings, to be compiled in such
manner and presented in such publications as the agency con-
siders appropriate.

3. For the purpose of agency efforts that may be made in co-
operation with the Chairman of the Administrative Conference
of the United States, to lessen delays in administrative pro-
ceedings, the statistical compilation should show the number of
days which elapsed during each significant step of the proceed-
ings which were concluded during the year.

4. In designing each agency's compilation, the following in-
formation, together with the time-study data referred to in 3
above, should be considered minimal :

(a) The number of proceedings of each kind pending at
the beginning of the year ;

(b) The number of new proceedings filed or otherwise
commenced during the year ;

(c) The number of proceedings concluded during the year
and the manner of their disposition (i.e., by settlement,
dismissal on procedural grounds, decision on the merits
without hearing, final decision by agency after hearing, and
an examiner's initial decision, etc.) ;

(d) The number of proceedings remaining at the end of
the year ; and

(e) The number of proceedings concluded during the year
which were appealed to the courts.

5. Each agency should periodically analyse all of the informa-
tion thus compiled and should develop improved techniques fitted
to its particular needs to reduce delays and expense and other-
wise to improve its administrative processes. A copy of this
analysis should be submitted to the Administrative Conference
of the United States.

6. In presenting its statistical compilation, each agency should
summarize this analysis and describe the specific steps it has
taken toward the ends referred to in 5 above.

286 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES

7. Each agency, in its subsequent compilations, should follow
a pattern that makes possible a comparison of data with cor-
responding data for earlier periods, thus reflecting changes in
backlogs, volumes, and elapsed times and providing a measure of
the agency's experience following the specific actions referred to
in 6 above.

REPORT OF THE COMMITTEE ON LICENSES AND
AUTHORIZATIONS IN SUPPORT OF RECOMMENDATION
NO. 14

Prepared by
The Staff of the Office of the Chairman

Statistics assembled by the Office of the Chairman of the
Administrative Conference report that 527,436 formal adminis-
trative proceedings v^ere pending before 34 departments and
independent agencies of the Federal Government during the six-
year period from July 1, 1960 to July 1, 1966. All of these cases
were of kinds which normally involve oral hearings and de-
cision on the basis of the hearing record.^

In numbers, these formal proceedings represent only a small
part of the Federal administrative process. Presumably the
volume of proceedings which are not decided on the basis of
a hearing record far exceeds the number of formal cases. For
example, the above total does not include approximately 75,000
U.S. Board of Parole cases during this period in which oral
hearings were held, but the hearing provided only a part of the
basis for decision. Similarly the total figure does not include
the substantial number of cases which ordinarily are determined
on written submissions without oral hearings, such as the ap-
proximately 1,800 proceedings conducted each year by the Trade-
mark Trial and Appeal Board.

For purposes of the Administrative Conference statistics, the
term "proceeding" was limited to disputed matters. The great
bulk of the administrative process consists of the routine han-
dling of large numbers of applications, claims, complaints, etc.
which only rarely become the subject of "proceedings" in the
sense that the agency's process for their disposition involves the
receipt of opposing evidence and argument on disputed issues
of law or fact. The Conference statistics therefore exclude, for
example, the Federal Communications Commission's normal proc-

* The Administrative Conference compilation notes the omission of a few cases of kinds for
which figures are not available or which are instituted so infrequently that they are of no
interest to the work of the Conference. Of the total number of proceedinKS, 28,897 still were
pending at the end of the six-year period. A list of the reporting departments and independent
agencies is attached as Appendix A.

287

288 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES

essing of radio station applications in the non-broadcast and
non-common carrier field, such as applications for public safety,
industrial, amateur, land transportation, aviation, and marine
radio services (514,039 applications processed in 1967 and
523,550 in 1968).-

The formal proceedings which are included in the figures as-
sembled by the Administrative Conference are of great variety,
ranging from social security hearings of consequence to a single
pensioner to complicated rate cases of substantial impact upon
entire industries and broad segments of the consuming public.
Because of this variety, the 527,436 figures itself is of no signifi-
cance. However it does serve to illustrate that the Federal ad-
ministrative process is a governmental activity of considerable
proportions.

The Administrative Conference Committee on Licenses and
Authorizations respectfully submits that, because of the magni-
tude of the Federal administrative process, much of the informa-
tion which is indispensable to an adequate understanding of that
process can be developed and presented intelligibly and usefully
only through statistical study. To manage its business effectively,
an agency must have the means of understanding its operations.
If changes in agency organization and procedure are to be made
with confidence that they will produce greater fairness and
effectiveness in future operations, they must be developed with
a full understanding of past and present agency experience. In
many areas of Federal agency activity only statistical study can
assure such understanding. Without reliable data, efforts toward
procedural reform in such areas may be only uncertain probes
into a bottomless morass of imperfectly understood or misunder-
stood experience.

In particular, the problem of inordinate delays in the ad-
ministrative process demands statistical study. Through the years
of developing concern over the shortcomings of the administra-
tive process as an important element of our system of govern-
ment, critical attention has focused constantly upon this problem.
One of the reasons for the extensive reliance of our system
upon administrative agency processes has been the assumption
that a specialized and highly expert administrative tribunal can
appropriately dispose of a large volume of particular kinds of
cases much more swiftly and economically than the courts. Al-
though many agencies have labored commendably over the years

FCC Annual Reports for 1967 and 1968.

REC. 11. COMPILATION OF STATISTICS 289

to realize this objective, the problem of delay apparently remains
today as one of major proportions,

A random sample of 5,000 cases reported in the Administrative
Conference compilation as having traversed the full route through
hearing, preliminary decision, exceptions, and agency final de-
cision indicates that the total elapsed time from the date the
matter was committed to the formal hearing process to the date
of the final decision was in excess of 1,000 days in 730 cases,
more than 5 years in 135 cases, and over 10 years in 38 cases.
One proceeding lasted almost 20 years.

The average elapsed time for the 5,000 proceedings was 465
days, or 1 year and 100 days. These "total" times do not include
whatever period the application, complaint, or claim, was under
preliminary investigation, was on the agency's "processing line,"
was the subject of negotiations looking toward settlement, or
simply was waiting in line, prior to its being committed to formal
hearing procedures by designation for hearing or otherwise.

Obviously an administrative remedy which takes more time
than the private party involved has to spend is no remedy at
all. Because governmental activity now plays such a prominent
role in business afl^airs, inordinate delays in public administra-
tion can constitute a serious encumbrance upon private business
activity and private initiative and may, in its cumulative effect,
slow the nation's economic development. For the individual to
whom a particular agency action may be the difference between
self-employment and a dead-end job, professional medical care or
self-treatment, an education or an unskilled job, hospitalization
or permanent disability, or self-sufficiency as a pensioner or
dependence upon relatives, delays may work insufferable hard-
ships.

According to the statistics of the Office of the Chairman of
the Administrative Conference, the total volume of formal pro-
ceedings increased steadily over the six-year period of that com-
pilation. Agency annual reports indicate that informal procedures
increased at an even greater rate. Today there would appear to
be no reason to expect that such growth will not continue.

The Committee is of the view that time has run out for casual
efforts to combat inordinate delays in agency proceedings. The
Committee believes that an intensive and concerted attack upon
this persistent problem is long overdue.

Further, the Committee is convinced that the necessary first
step, if the effort is to be effective in substantially reducing
delays, is the compilation of comprehensive information on each

290 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES

agency's backlog of cases, its current volume of new proceedings
instituted, the method of their handling and the manner of their
disposition, and the significant details as to the time involved
in their handling.

In concluding that there is a substantial need for statistical
study of administrative proceedings, the Committee is not un-
aware of the limitations of statistical study, particularly where,
as in the case of administrative proceedings, no two of the things
being counted are exactly the same. As Kent Professor at Co-
lumbia in 1922, Harlan Fiske Stone, in a speech relating to
judicial statistics, appropriately noted:

"The statistical method of dealing- with social problems often cannot be
relied upon as a mathematical demonstration leading to specific conclu-
sions, but it may be used to indicate tendencies, to mark out the bound-
aries of a problem, and to point the directions to be g-iven to a particular
investigation of a nonstatistical character."

The Committee fully appreciates the fact that statistics are
seldom an end in themselves. However, carefully tailored to the
purposes they are intended to serve, they can be an indispensable
tool for effective management of agency caseloads and an in-
valuable device in the location of procedural problems and their
causes.

In part because of the limitations of statistical study, but
perhaps more because of the dissimilarity of statistical techniques
to the traditional methods of legal research, statistics have not
enjoyed extensive use by study groups in the area of administra-
tive reform. In 1939 the Attorney General's Committee on Ad-
ministrative Procedure collected some data on the volumes of
administrative proceedings and the time periods involved in their
disposition. The statistical undertakings of the Hoover Commis-
sions were somewhat more ambitious. The first continuing com-
pilation was initiated by the Office of Administrative Procedure
in the Department of Justice in 1957. That series at the outset
was limited to formal proceedings conducted by examiners ap-
pointed pursuant to section 11 of the Administrative Procedure
Act and was patterned in some respect after the statistics of
the Administrative Office of the United States Courts.

The temporary Administrative Conference of 1961 and 1962
compiled data for those two years, expanding somewhat the
Office of Administrative Procedure series and utilizing computer
processing. When that effort ended, the Senate Judiciary Sub-
committee on Administrative Practice and Procedure, in coopera-
tion with the Office of Administrative Procedure, continued the

REC. 11. COMPILATION OF STATISTICS 291

series for one more year, 1963, and later collected and held for
processing the raw data for the years 1964-1966, in anticipation
of the establishment of the statutory Administrative Conference.
The Office of the Chairman has had these figures computer-
processed and, combining them with the 1961-1963 figures, now
has completed a six-year compilation. Although budget limitations
have precluded printing this compilation, it is undergoing careful
study by the Conference staflf and is available for the use of the
committees of the Conference and others who may find it
helpful.

Past efforts to provide comprehensive statistical data have
been invaluable to the work of the Office of Administrative
Procedure and to the 1961-62 Administrative Conference in
providing needed information of which no other research tech-
nique is capable. However, for two principal reasons, the prod-
ucts of these efforts have never realized their full potential.
First, the considerable variety of agency functions and the result-
ant variety of procedures among the agencies severely limits
the utility of any design or format for a statistical compilation
which seeks to measure the same factors in all proceedings
across-the-board. For example, the Committee discussed one kind
of procedure in one of the major regulatory agencies in which
the really costly delays occur before the matter becomes a "pro-
ceeding," as that term was used in compiling the Administrative
Conference figures. This procedure was contrasted with others
in other major regulatory agencies in which an applicant often
files for operating authority with no intention of prosecuting
his application, but rather only to assure his place as a party
in a comparative proceeding in the event competitors seriously
prosecute applications for the same authority. There simply is
no way of providing comparable time-study data on these two
kinds of proceedings by any single, across-the-board compilation
design. There are many other examples of this kind of problem.

The Committee concludes therefore that, i n order to go beyon d
t he utility of the present Administrative Conference statistical
compilation, the statistical studies for each agency must be
tailored carefully to fit the particular procedures of the individual
agency, rather than conformed to any across-the-board pattern .

The second principal limitation upon the utility of past sta-
tistical efforts results from the fact that the design of the com-
pilation in each case has followed, rather than preceded, the
experience which the compilation reported. A thoughtful decision
by each agency before the year for which figures are to be

292 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES

compiled begins, so that arrangements can be made in advance
for the recording of the desired information, obviously will pro-
vide much more useful data than can be recovered after the
year has ended.

The Committee therefore recommends that each agency de-
termine precisely v^hat information it needs to deal effectively
with problems of inordinate delays and expense, etc. in its own
administrative processes, and make whatever recording or re-
porting arrangements are necessary before the beginning of the
next fiscal year, so that comprehensive information concerning
that year's experience may be assured.

The Committee believes that every agency should compile and
make available basic data reflecting the nature and proportions
of the agency's caseload generally. The various factors measured
by the Administrative Conference statistics may provide a pat-
tern for the agencies in designing these basic statistics. The
Administrative Conference compilation consists of three parts,
the first of which provides a general "catalog" of formal pro-
ceedings. It is the Committee's idea that the agency compilations
proposed by this recommendation should not be limited to formal
proceedings, or indeed to proceedings, as that term was employed
in assembling the Conference data. Rather, agency figures should
report all matters directly fixing the rights, privileges, and ob-
ligations of private interests, including the routine handling of
applications and claims such as those of the Federal Communica-
tions Commission.

Part I of the Administrative Conference compilation, the list-
ing of formal proceedings, describes briefly the nature and pur-
pose of each different kind of proceeding conducted by each
department or independent agency, usually indicating how and
by whom the proceeding is instituted and what kind of relief or
sanction is contemplated, with citations for the agency's au-
thority and its rules of practice governing the particular kind of
proceeding. Part I also provides a general classification of pro-
ceedings into a dozen broad categories and indicates as to each
kind of proceeding whether it is subject to the requirements of
sections 556 and 557 of title 5 of the United States Code, formerly
sections 7 and 8 of the Administrative Procedure Act.

Part II reports, for each kind of proceeding, the case input
and output during the year and indicates generally the manner
in which cases were disposed of. Specifically, it consists of a
13-column schedule under the following column headings :
1. Cases pending at the beginning of the fiscal year

REC. 14. COMPILATION OF STATISTICS 293

2. Number of new cases commenced during the year

3. Number of cases reopened during the year

4. Total input of cases for the year

5. Number of cases closed during the year by agency
decision on the merits after hearing and preHminary decision

6. Cases closed by agency decision on the merits after
hearing without a preliminary decision

7. Cases closed after hearing by preliminary decision
which became final without review by the agency

8. Cases closed by decision on the merits without an oral
hearing

9. Cases closed by withdrawal, consent, settlement or
other agreement

10. Cases dismissed without the consent of the parties, on
procedural grounds

11. Other final disposition (describe in footnote)

12. Total output of cases for the entire year

13. Balance remaining at the end of the fiscal year
Obviously the various columns indicating the manner in which

cases were concluded can be made much more meaningful in an
individual agency's compilation by dividing the total output into
categories which reflect the particular agency's experience in-
stead of the experience of all agencies generally. This limitation
of the Administrative Conference statistics is well illustrated by
the inadequacy of the above-described column headings in re-
lation to the many kinds of cases, for example, in which no pre-
liminary decision is issued.

Part III of the Administrative Conference statistics provides
basic time-study data on random samples of the cases which
involved oral hearings (the proceedings reported in columns
5, 6, and 7 of Part II) and, for the years 1964-66, on random
samples of the cases reported in column 8.

In addition to basic backlog, volume, and time-study data of
this general nature, each agency should include in its own com-
pilation whatever data it feels may be useful for purposes of
special statistical studies. For example, if an agency feels that
the answer to its particular caseload problem may be greater
use of settlement and compromise techniques, it should assemble
and report whatever data may serve that purpose. It should study
and decide in advance exactly what statistical information might
be useful in developing procedures for settlement, then collect
and report such information. For example, how many cases are
settled, at what stage of the proceeding, and subject to what

294 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES

conditions? What is the incidence of those factors which the
agency is able to identify as factors which limit the opportunity
for settlement or otherwise militate against settlement, etc.

Examination of recent annual reports of a number of de-
partments and agencies indicates a considerable amount of volume
data, both on proceedings and on the routine processing of un-
disputed matters, is made available in such reports. Occasionally
there is laso information int he nature of these special-purpose
statistical studies such as the example above. However, there
is virtually no information which would assist in meeting the
problem of inordinate delays. Much more comprehensive statis-
tics are needed to fulfill the objectives stated at the bottom of
the first page of the recommendation.

To repeat the same statistical information at regular intervals
accomplishes much more than simply multiplying such informa-
tion. The continuing accretion of data, in effect, adds a third
dimension to the demonstration. It enables comparisons over a
period of time which indicate the direction in which the re-
ported experience is moving as well as the effect of procedural
or other changes. An essential part of the Committee's recom-
mendation, therefore, is that each agency should collect and
publish its statistics as a continuing series. Obviously the pub-
lication should be annual. In the opinion of the Committee, the
department and agency annual reports provide an ideal oppor-
tunity for such annual publication.

The principal thrust of the recommendation of the Committee
on Licenses and Authorizations is that statistical analysis of
an agency's administrative procedures should, in the first in-
stance, be a regular and important activity of the agency itself.
The responsibility for fair, expeditious, and effective procedures
is, in the first instance, in the agency. The immediacy of the
agency's experience with its procedures affords it a special com-
petence which makes its own analysis far more useful than study
by outside experts.

The role of the Administrative Conference under its statutory
responsibility for the collection of statistics and information
concerning agency procedures should be as a central exchange
or "clearing-house" for specific ideas for improvements in pro-
cedures developed from the individual agencies' analyses and as
a forum for both comprehensive and particularized study of the
experience of the several departments and agencies. But the
collection and publication of fundamental statistical information,

REC. 1 J. COMPILATION OF STATISTICS 295

carefully fashioned to the particular agency function, should be
the duty of the individual agency in the first instance.

The Committee is convinced that detailed study by each agency
of its own experience can provide insights into procedural prob-
lems which no amount of examination by an extrinsic body,
however expert, can provide. By the same token, the universal
experience represented by the Conference membership can pro-
vide a comprehensive understanding of administrative procedures
beyond the competence of any individual agency. The many
serious problems of the Federal administrative process demand
the best efforts of the agencies and of the Conference.

In the past, statistical study has been laborious. Today, every
agency has its own computer facilities or, at nominal expense,
can arrange for the use of the facilities of some other agency.
The Committee is confident that, with such capability, continuing
statistical study of administrative procedures by the agencies
themselves, with the help of the Administrative Conference, will
eliminate the general uncertainty which attends so many of our
present procedural problems and will contribute substantially in
ultimately eliminating excessive delays and improving the fair-
ness and effectiveness of agency procedures.

APPENDIX A

DEPARTMENTS AND AGENCIES WHOSE PROCEEDINGS ARE INCLUDED IN THE
1960-1966 STATISTICAL COMPILATION OF THE OFFICE OF THE CHAIRMAN OF THE
ADMINISTRATIVE CONFERENCE

1. Department of Agriculture

2. Atomic Energy Commission

3. Civil Aeronautics Board

4. Civil Service Commission

5. Department of Commerce

6. Department of Defense

7. Federal Aviation Agency

8. Federal Coal Mine Safety Board of Review

9. Federal Communications Commission

10. Federal Deposit Insurance Corporation

11. Federal Home Loan Bank Board

12. Federal Maritime Commission

13. Federal Power Commission

14. Federal Reserve System Board of Governors

15. Federal Trade Commission

16. General Services Administration

17. Department of Health, Education and Welfare

18. Department of the Interior

19. Interstate Commerce Commission

296 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES

20. Department of Justice

21. Department of Labor

22. National Aeronautics and Space Administration

23. National Labor Relations Board

24. National Mediation Board

25. National Science Foundation

26. Post Office Department

27. Railroad Retirement Board

28. Securities and Exchange Commission

29. Small Business Administration

30. Department of State

31. Subversive Activities Control Board

32. Tennessee Valley Authority

33. Department of the Treasury

34. Veterans' Administration

RECOMMENDATION NO. 15

CONSIDERATION OF ALTERNATIVES IN LICENSING

PROCEDURES

Court decisions, notably Scenic Hudson Preservation Confer-
ence V. FPC,^ have emphasized that in licensing cases the Federal
Power Commission must explore and give proper consideration
to possible alternatives to the specific plan proposed by the ap-
plicant. This principle may in the future be applied to other
licensing agencies. Since the range of possible alternatives in
any case can be extensive and in some cases virtually unbounded,
ways must be sought to control the scope and duration of licens-
ing proceedings within manageable limits while meeting the
requirements of the law.

RECOMMENDATION

Each agency which issues licenses, permits, or other forms of
authorization, should seek to create procedures fitting its partic-
ular circumstances which will assure appropriate consideration
of alternatives where necessary, and at the same time will permit
efi'ective administration of that agency's licensing functions.

Because the various agencies must deal in their licensing pro-
cedures with many diverse subject matters, the Administrative
Conference cannot specify a single rule and procedure for achiev-
ing this objective. Procedural techniques which experience has
shown useful in analogous situations and which an agency
might consider include: (1) Guidelines embodying a rule of
reason concerning the number and character of alternatives to
be considered in particular types of cases; (2) rules providing
a point in time beyond which the issues in a proceeding will not
be expanded to include additional alternatives except under com-
pelling circumstances; (3) techniques, such as prehearing con-
ferences and the filing of testimony in written form before trial,
which tend to promote early identification of interested parties
and important alternatives; and (4) placing responsibility upon
the party or other person proposing an alternative to the ap-
plicant's proposal to make an appropriate threshold showing that
the alternative deserves the agency's consideration.

'354 F.2d 608 (2d Cir. 1965) cert, denied. 384 U.S. 941 (1966). See also Udall v. FPC, 387
U.S. 428 (1967).

297

REPORT OF THE COMMITTEE ON LICENSES AND
AUTHORIZATIONS IN SUPPORT OF RECOMMENDA-
TION NO. 15

1. Background

Under a principle supported by a number of recent court
decisions, the duty of an agency in a licensing case goes beyond
the task of determining whether the applicant's proposal would
result in a net gain to the public.^ These cases assert that the
agency must, in addition, consider alternative courses of action
which might serve the public interest better than the specific
proposal of the applicant. Moreover, the agency will not neces-
sarily fulfill this duty in a particular case if it merely considers
whatever evidence regarding alternatives the private parties
happen to bring forward. The agency has, rather, an independent
and affirmative obligation to see that alternatives are adequately
explored before a decision is rendered.

Scenic Hudson Preservation Conference v. FPC - is the leading
decision on this subject. In Scenic Hudson the Federal Power
Commission had issued an order authorizing a power company
to construct and operate a hydroelectric facility on the Hudson
River. ^ During the course of the formal administrative proceed-
ings which led to the issuance of this licensing order, the pro-
posed project had been vigorously opposed by conservationist
intervenors, who argued that the facility would desecrate an
area of unique scenic beauty. The conservationists did not
seriously question the company's need for an additional source
of bulk power. Instead, they maintained that the public interest
dictated that the company be forced to rely on a source other
than the proposed project. The Commission found, however, that
the company's proposal was superior to any of the suggested
alternatives, including power which the company might be able
to purchase from interconnected systems, as well as power which
it might generate by alternative methods.

^Scenic Hudson Preservation Conference v. FPC, 354 F.2d 608 (2d Cir.. 1965), Cert, denied,
384 U.S. 941 (1966), Northern Natural Gas Co. v. FPC, 399 F.2d 953 (D.C. Cir. (1968);
Marine Space Enclosures, Inc. v. FMC, No. 22,936 D.C. Cir., July 30, 1969. And see Citizens
for Allegan County, Inc. v. FPC, No. 21,842, D.C. Cir., April 29, 1969 (dictum).

2 354 F.2d 608 (2d Cir., 1965), cert, denied, 384 U.S. 941 (1966).

3 See 16 U.S.C. 797(e) (1964).

298

REC. 15. LICENSING PROCEDURES 299

On petition for review of the Commission's order, the Court
of Appeals for the Second Circuit conchided that the FPC had
"failed to make a thorough study of possible alternatives" to a
plant which was to be located in what the court referred to as
"an area of unique scenic beauty and major historical signifi-
cance." The court found "no evidence in the record to indicate
that . . . the Commission . . . ever seriously considered" power
from interconnecting systems as an alternative. In addition, the
court dismissed the evidence relating to gas turbines as a com-
bination of "self-serving" statements on behalf of the applicant
and "scanty," "hastily prepared" testimony offered by the
intervenors.

The court held, in effect, that the Commission cannot rely on
the adversary process to bring all necessary facts to its attention.

In this case, as in many others, the Commission has claimed to be the
representative of the public interest. This role does not permit it to act
as an umpire blandly calling balls and strikes for adversaries appearing
before it; the right of the public must receive active and affirmative pro-
tection at the hands of the Commission.

. . . The Commission must see to it that the record is complete. The
Commission has an affirmative duty to inquire into and consider all rele-
vant facts.'

It is made abundantly clear in other portions of the opinion
that the term "relevant facts" includes at least some alternatives.
The set of included alternatives is variously described by the
court as those which are "possible," or "reasonable," or "feasible."

Apparently because it viewed the FPC as having an affirmative
duty to explore alternatives, the court held that the Commission
erred in refusing to re-open the record to permit the taking of
additional testimony regarding the gas turbine alternative. The
testimony in question had been offered by a taxpayer and con-
sumer group in support of its eleventh-hour petition to intervene.
The FPC rejected the petition and the proffered testimony as
untimely, since the filing was made after the Commission had
heard oral argument in the case. But the Second Circuit brushed
aside the question of timeliness, noting that the petition was
filed more than two months before the Commission entered its
order licensing the Hudson River project.

It is possible to conclude from the opinion in Scenic Hudson
that the aflfirmative duty to explore alternatives is a Federal
Power Act specialty. Section 10(a) of that Act requires the
Commission to find :

* 354 F.2d at 620.

300 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES

That the project adopted . . . shall be such as in the judgment of the
Commission will be best adapted to a comprehensive plan for improving
or developing a vi^aterway or waterways for the use or benefit of inter-
state or foreign commerce, for the improvement and utilization of
water-power development, and for other beneficial public uses, including
recreational purposes; and if necessary in order to secure such plan the
Commission shall have authority to require modification of any project
and of the plans and specifications of the project works before approval.^

The reference in Section 10(a) to a "comprehensive plan"
clearly was regarded as significant by the court in Scenic Hudson.
At one point in the opinion the court flatly states :

The failure of the Commission to inform itself of these alternatives can-
not be reconciled with its planning responsibility under the Federal Power
Act.'

And at another point the court cited Section 10(a) in support
of the following statement :

The Federal Power Commission argues that having intervened "petition-
ers cannot impose an affirmative burden on the Commission." But, as we
have pointed out. Congress gave the Federal Power Commission a spe-
cific planning responsibility.'

On the other hand, the court said that the Commission dis-
regarded not only "the statute" but "judicial mandates" in fail-
ing "to probe all feasible alternatives." The judicial mandates to
which the court referred are City of Pittsburgh v. FPC "^ and
Michigan Consolidated Gas Co. v. FPC.-* Both of these cases
were decided, however, under the Natural Gas Act,^" a statute
which lacks any language comparable to that of Section 10(a)
of the Federal Power Act. Working with nothing more peculiar
than the "public convenience or necessity" standard in Section
7(b) of the Natural Gas Act, the court in City of Pittsburgh
observed :

The existence of a more desirable alternative is one of the factors which
enters into a determination of whether a particular proposal would serve
the public convenience and necessity. That the Commission has no au-
thority to command the alternative does not mean that it cannot reject
the proposal."

Michigan Coyisolidated, which involved a Commission order au-
thorizing the abandonment of natural gas service, arose under

= 16 U.S.C. 803(a) (1964).

«354 F.2d at 622.

' Id. at 620.

«237 F.2d 741 (D.C. Cir., 1956).

'>283 F.2d 204 (D.C. Cir.), cert, denied, 364 U.S. 913 (1960).

10 52 Stat. 821-833, as amended, 15 U.S.C. 717-717w (1964).

" 237 F.2d at 751.

REC. 15. LICENSING PROCEDURES 301

the same section of the Natural Gas Act. In remanding that
case to the Commission for consideration of a settlement proposal
filed with the FPC by an intervening- party, the court stated:

Even assuming- that under the Commission's rules [the applicant's] rejec-
tion of the settlement rendered the proposal ineffective as a settlement, it
could not, and we believe should not, have precluded the Commission
from considering the proposal on its merits. Indeed, the proposal appears
prima facie to have merit enough to have required the Commission at
some stag-p in the proceeding to consider it on its own initiative as an
alternative to total abandonment.'" (Emphasis in original.)

City of Pittsburgh and Michigan Consolidated therefore
anticipated much of what was later said in Scenic Hudson. For
this reason, agencies which issue licenses under a "public in-
terest" standard, or a simple variant thereof, would be well-
advised to view Section 10(a) of the Federal Power Act as
conducive, but not wholly indispensable, to the position taken
in Scenic Hudson. Indeed, the broader interpretation of Scenic
Hudson is supported by recent decisions of the Court of Appeals
for the District of Columbia Circuit. That court has cited Scenic
Hudson with approval in cases involving- the Shipping Act " and
the Natural Gas Act.^ '

Additional applications of the Scenic Hudson doctrine may
become apparent from time to time through the efforts of imagi-
native practitioners. For example, common carrier merger pro-
ceedings would seem to represent an area in which the impact
of Scenic Hudsoyi is likely to be felt.^' However, in certain other
areas, such as the licensing of nuclear reactors, the narrow focus
of the applicable decisional criteria may preclude any extensive
application of the doctrine.^"

II. The Problems

The possibility that Sceiiic Hudson will prove to have a wide-
spread impact on the Federal administrative process suggests
that all licensing agencies should be fully aware of the pro-
cedural problems which seem to inhere in an affirmative under-
taking to probe all feasible alternatives.

First among these problems is, of course, the sheer number of
alternatives which might have to be investigated. The implica-

" 283 F.2d at 224.

" Marine Space Enclosures, Inc. v. FMC, note 1 supra.

^* Northern Natural Gas Co. v. FPC. 399 F.2d 953, 973 (1968).

^^ E.g., railroad merger proceedings under 49 U.S.C. 5(2) (1964).

'"Under 42 U.S.C. 2134(b), the responsibility of the Atomic Energy Commission in licensing
nuclear reactors is "to promote the common defense and security and to protect the health
and safety of the public."

302 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES

tions of delay and expense are obvious. The evaluation of just
one alternative may be a formidable task requiring the participa-
tion of engineers or economists and the performance of sophis-
ticated tests or statistical studies. Then too, the testimony with
respect to a single alternative could take up several full hearing
days.

What an attempt to probe "all feasible alternatives" might
entail is indicated by the proceedings in the Scenic Hudsoyi case
on remand before the FPC. By May, 1969, more than seventy
days of hearings had been held, and evidence had been introduced
on the following alternatives :

— Alte7-native hj/droelectric sites. The Commission's staff
made a study of thirty-five potential hydro sites; twenty-
three were studied by the applicant.
— Opportumties to purchase power at wholesale. The testi-
mony covered four systems with which the applicant was
then interconnected, plus two other conceivable intercon-
nections.
— Alternatives suggested by the applicant. After a computer
study eliminated a number of alternatives as impractical,
the applicant introduced evidence on the following: (1)
2-1000 mw conventional steam units; (2) 2040 mw of
gas turbine capacity; (3) 2000 mw of nuclear capacity;
(4) 1000 mw of nuclear capacity plus 1088 mw of gas
turbine capacity; (5) 8-250 mw fossil fuel peaking units;
and (6) 1000 mw of nuclear capacity plus 4-250 mw fossil
fuel peaking units.
— Alternatives suggested by intervenors. The principal in-
tervener in the case, a league of independent groups with
an interest in conservation, made an extensive presenta-
tion on a combination of 5-140 mw peak load gas turbines
and a 1000 mw nuclear unit. Other witnesses sponsored
by the same intervener gave testimony on (1) a 2000 mw
nuclear alternative, (2) 1,800 mw of gas turbine capacity,
and (3) 810 mw of gas turbine capacity plus a 1000 mw
nuclear unit.
— Exotic alternatives. Brief testimony was heard on such
"exotic" sources of electrical energy as fuel cells and
MHD (magnetohydrodynamic) generators.
— Relocation of powerhouse. The major alternative of the
Commission's staff was a proposal which would have
shifted the applicant's powerhouse to a nearby site and
put it entirely underground. Staff studies indicated that

REC. 15. LICENSING PROCEDURES 303

this alternative would reduce the adverse scenic conse-
quences of the project while producing- an economic bonus
for the applicant.
— Alternate transmission line routes. In addition to a num-
ber of different overhead transmission routes, cost evidence
was introduced on five possible underground routes.*"

The gas pipeline licensing function of the FPC provides
another illustration of how a single case can involve numerous
alternatives. Consider, for example, this statement made by
counsel for an intervening landowner in a 1968 case :

We suggest, Mr. Examiner, that the route selected by the company is not
the route that best serves the public convenience and necessity. We believe
there are several alternative routes, even alternatives within the context
of the proposal made by the company, modifications to it, which might be
better adapted to serve the interests of not only [his client] but other
landowners in the area and provide better protection for public safety."

Clearly, the phrase "all feasible alternatives" is capable of de-
fining an imposing number of issues.

Some alternatives may not be suggested, indeed may not even
become apparent, until a proceeding is well underway. Thus, un-
less some meaningful requirement of timeliness can be imposed,
the scope of a particular hearing could be not only very broad
but ever-expanding. In addition, the number of parties may well
grow as additional alternatives are introduced, since any alter-
native may threaten interests which are not threatened by the
applicant's proposal.

III. Responding to the Challenge of Scenic Hudson

The decision in Scenic Hudson merits careful consideration
by all Federal agencies which issue licenses, permits, or other
forms of authorization. Although the practical significance of
the case may vary considerably from one licensing function to
another, it would be a wise precaution in each instance to evalu-
ate the challenge of the court's mandate. Where the exploration
of alternatives could have a significant dilatory impact, some
thought should be given to the establishment of principles and
procedures which both recognize the alternative plan doctrine
and provide assurance that it will not paralyze the particular
licensing function.

''These alternatives are discussed in a hearing examiner's initial decision dated August 6,
1968 and a staff brief on exceptions dated October 7, 1968. FPC Docket No. P-2338.
" Transcript of record, p. 93, Shenandoah Gas Co.. FPC Docket No. OP 68-196.

304 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES

An appropriate adjustment to Scenic Hudson would involve
some degree of agency control over the number of alternatives
to be considered, and the period during which alternatives may
be suggested. The first task may be difficult. It will involve the
development of guidelines specifying a reasonable range of alter-
natives. This could be done either by rule or by order in individual
cases. In either event, the exclusionary effect of the guidelines
would have to be tempered by providing for an expansion of the
issues where a party is able to make a suitable threshold showing
on the merits of an additional alterantive. Establishing a time
limit is, of course, not difficult and could likewise be accomplished
either by rule or by order.

Exclusionary rules or orders must, however, be accompanied
by greater efforts to identify potentially fruitful alternatives.
In this regard, the agency's staff should normally play the leading
role. In addition, procedural techniques, such as pre-hearing con-
ferences and the advance submission of direct testimony in
written form, might be used successfully to expose the various
logical alternatives to an applicant's proposal.

Conscientiously designed procedures for the consideration of
alternatives are likely to be respected by the courts. Even though
Scenic Hudson does not specifically acknowledge a power on the
part of the FPC to impose reasonable limits concerning the
consideration of alternatives, it cannot be assumed that the
court intended to preclude efficient administration of the Federal
Power Act or any other statute. The answer must be that a
"rule of reason" is compatible with the teachings of Sceinic
Hudson.^^

"See Citizens for Allegan County, Inc. v. FPC, supra note 1, slip opinion at p. 13, where
the court stated :

. . . We agree that the FPC has an active and independent duty to suard the public in-
terest, and that this may require consideration of alternative courses, other than those
suggested by the applicant. This does not mean that the FPC must always undertake
exhausting inquiries, probing for every possible alternative, if no viable alternatives have
been suggested by the parties, or suggest themselves to the agency.

RECOMMENDATION NO. 16

ELIMINATION OF CERTAIN EXEMPTIONS FROM THE
APA RULEMAKING REQUIREMENTS

RECOMMENDATION

In order to assure that Federal agencies will have the benefit
of the information and opinion that can be supplied by persons
whom regulations will affect, the Administrative Procedure Act
requires that the public must have opportunity to participate in
rulemaking proceedings. The procedures to assure this oppor-
tunity are not required by law, however, when rules are pro-
mulgated in relation to "public property, loans, grants, benefits,
or contracts." These types of rules may nevertheless bear heavily
upon nongovernmental interests. Exempting them from generally
applicable procedural requirements is unwise. The present law
should therefore be amended to discontinue the exemptions to
strengthen procedures that will make for fair, informed exercise
of rulemaking authority in these as in other areas.

Removing these statutory exemptions would not diminish the
power of the agencies to omit the prescribed rulemaking proce-
dures whenever their observances were found to be impracticable,
unnecessary, or contrary to the public interest. A finding to that
effect can be made, and published in the Federal Register, as
to an entire subject matter concerning which rules may be pro-
mulated. Each finding of this type should be no broader than
essential and should include a statement of underlying reasons
rather than a merely conclusory recital.

305

REPORT OF THE COMMITTEE ON RULEMAKING IN
SUPPORT OF RECOMMENDATION NO. 16

Prepared by

Arthur E. Bonfield

Professor of Laiv

University of Iowa

I. The Problem

In 1941 the Attorney General's Committee on Administrative
Procedure concluded that the rulemaking processes of federal
agencies "should be adapted to giving adequate opportunity to
all persons affected to present their views, the facts within
their knowledge, and the dangers and benefits of alternative
courses." ^ The Committee realized that the knowledge of an
administrative agency is rarely complete, an administrative
agency is not ordinarily a representative body, its deliberations
are not usually carried on in public, and its members are not
subject to direct political controls in the same way as are legis-
lators. Consequently, public participation "in the rulemaking
process is essential in order to permit administrative agencies
to inform themselves and to afford adequate safeguards to private
interests." - The message of the Attorney General's Committee
is as sensible today as it was when first communicated. Very
substantial reasons suggest that the interested public should have
an adequate opportunity to contribute to the rulemaking process.

The most obvious reason why such public participation is de-
sirable is that it helps to elicit "the information, facts, and
probabilities which are necessary to fair and intelligent action" ^
by those responsible for promulgating administrative rules. Since
an agency's own accumulated knowledge and expertise are rarely
sufficient to provide all the needed data upon which rulemaking

* Final Report of the ArroRNETi' General's Committee on Administrative Procedure 102
(1941) [hereinafter cited as Attorney General's Final Retort].

-Id. 103, quoted in S. Doc. No. 248. 79th Cong., 2d Sess. 19-20 (1946) [hereinafter cited as
S. Doc. No. 248] (Justification for enacting § 4 of Administrative Procedure Act). S. Doc.
No. 248 is the official legislative history of the APA and conveniently collects working papers
and committee reports.

' Attorney General's Final Report 102.

306

REC. Ifi. APA RULEMAKING EXEMPTIONS 307

decisions should be based, agency communication with interested
parties on the subject of proposed regulations is essential. Such
parties are usually in the best position to provide much of the
specific information necessary for wise rule formulation. An
opportunity for interested persons to inform appropriate ad-
ministrators of facts, views, or arguments that they consider
relevant to any proposed rule is, therefore, necessary for the
sound operation of government.'

Other reasons also dictate our government's need to involve
interested parties in the formulation of rules by affording them
the opportunities just noted. Thirty years ago it was asserted
that "our conception of administrative responsibility is under-
going profound change. The emphasis is shifting; instead of
[public] subserviency to arbitrary will [of administrators] we
require [administrative] responsiveness to commonly felt needs
and wants." ' When interested parties have a chance to communi-
cate facts and opinions bearing on proposed regulations to the
appropriate authorities, the latter are likely to become more
responsive to the problems of those involved than would other-
wise be the case.

Public involvement in the formulation of rules is also an ex-
cellent way to implement the ideal of participatory democracy.
If we assure interested parties an opportunity to influence the
decision-makers by communicating with them, public involvment
in the rulemaking process will expand, making the process more
representative. Public participation in rulemaking may be partic-
ularly helpful when an agency promulgates an unpopular rule.
Dissenters may be less likely to sabotage a rule in an active way
if they have had an adequate opportunity to present their
objections prior to its promulgation. Moreover, the failure of
officials to secure views from the relevant public before regulations
are issued may result in a lack of administrative preparation for
certain problems that could arise from those rules' application, or
the community's reaction to them.

Parties affected by administrative rules have a distinct per-
sonal interest in how they are made. An adequate opportunity

■* Recognition of the value of such public participation in Bovernment policy formulation
was reflected in the May, 1969. action of the President's Task Force on Oil Import Quota
Controls. AlthouKh not re(iuire<i to do so, the Task Force decided to assure that all relevant
information and opinion on the (luestion of oil import quota controls was before it by invitinK
interested persons to "submit concise written comments to the task force on whether oil
imports should remain subject to reduction and, if so, to what degree and by what means."
34 Fed. Reg. 7264 (1969). The Attorney General's Committee on Administrative Procedure
made a similar broad solicitation of views in 1940. Attorney Genotal's Final Report 4-5.

' Friedrich, Public Policy and the Nature of Administrative Reaponsibility, in Public Ad-
ministration AND Policy 241 (P. Woll ed. 1966).

308 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES

to present relevant information to appropriate officials is one of
the most important tools with which individuals can defend
themselves against an exercise of rulemaking power that may-
be detrimental to their interests. Political realities may make
legislative modification of unwise regulations hopeless; and the
breadth of agency discretion may make judicial assaults un-
successful. In cases of this sort, an opportunity for affected
parties to communicate their views on proposed rules to the
appropriate officials may be the only meaningful chance those
parties will have to protect their interests against rules they
consider unwise.

It should be clear that the public participation in rulemaking
under discussion here is only directed at assuring an adequate
opportunity for interested persons to communicate their views,
information, and the like, to the relevant government officials.
There is no intention to transfer the actual decision-making
power with respect to rules to the interested public. Meaningful
public participation in the formulation of administrative rules
does not "in any way affect the authority of the agency or its
discretion. All that is required is the giving of ... an opportu-
nity to interested persons to present their views concerning the
proposed rule. The department or agency may give such con-
sideration to the views presented as it deems warranted under
the facts." «

To be meaningful, the opportunity to communicate with re-
spect to proposed rules need not necessarily require oral hearings ;
indeed, written submissions will usually be adequate. Such an
assurance of public participation in rulemaking does require,
however, that the public be given timely notice of all proposed
rulemaking and that an indication of the subject matter of the
rulemaking in question be included. Otherwise, the public partici-
pation which results will probably

be diffuse and of little real value either to the participating' parties or to
the agency .... Hence, sound practice dictates that ordinary [notice of
such rulemaking and opportunities to participate] be accompanied by
tentative drafts of the regulations being considered or by a precise state-
ment of the subjects which it is expected may ultimately be touched."

In addition to general notice of proposed regulations, adequate
public participation in the rulemaking process requires that the
exact terms of a new rule be published a reasonable time before

^ (Commission on Organization of the Executive Branch of the Governmejnt, Task
Force Report on Legal Sermces and Procedure 160 (1955) [hereinafter cited as Task
Force Report].

'Attorney General's Final Report 108 (emphasis added).

REC. IG. APA RULEMAKING EXEMPTIONS 309

its effective date. Otherwise, even if the public has participated
in the preliminary formulation of a rule, the final details of its
exact text may not be known to interested parties until the date
of its promulgation as law. A procedure foi' delayed efl'ectiveness
is, therefore, necessary "to correct error or oversight in regula-
tions before, rather than after, they become effective." "^ Such a
safeguard procedure will "afford persons affected a reasonable
time to prepare for the effective date of a rule or rules or to
take any other action which the issuance of the rules may
prompt." •'

Meaningful public participation in the rulemaking process
would also seem to demand recognition of another adminis-
trative obligation and private right. Interested parties should be
able, on their own motion, to induce a reasoned consideration of
the propriety of the issuance, amendment, or repeal of a rule, by
those authorized to make and modify rules. Absent this ability
of the concerned public, administrators satisfied with the status
quo might neglect to reexamine their position in light of any new
views or information that becomes available. A right to petition
for the issuance, amendment, or repeal of a rule and to receive
a reasoned response thereto is not only valuable as a protection
for private interests, but is also necessary to assure sound gov-
ernment. It forces agencies to reconsider their position with re-
spect to existing or proposed rules in light of petitioners' objec-
tions, therefore making it likely that wiser policies will be pursued
with respect to those rules than would otherwise be the case.

At some point, however, requirements of the sort discussed
above may directly conflict with other values important to the
operation of our polity. More specifically, there is an obvious
need to conduct our government efficiently, expeditiously, effec-
tively, and inexpensively. No rulemaking scheme may be consid-
ered acceptable unless it fairly reconciles these latter values with
the societal interest in maximizing public participation in
the development of administrative regulations. Imposition of re-
quirements on the rulemaking process that unduly fetter agency
action, or frustrate its purposes, would obviously strike an in-
adequate balance between the competing values involved. Yet
the interest in involving interested parties in rulemaking is not
so slight that it should be set aside solely on the basis of minor
inconvenience or expense to government.

Section 4 of the Federal Administrative Procedure Act

" Attorney General's Final Report 114.
" S. Doc. No. 248. at 201, 259.

310 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES

(APA), now 5 U.S.C. § 553, attempts to reconcile this conflict
between the need for public participation in rulemaking and the
need for efficient, expeditious, effective, and inexpensive govern-
ment. That provision states :

(a) This section applies, according to the provisions thereof, except to
the extent that there is involved —

(1) a military or foreign affairs function of the United States; or

(2) a matter relating to agency management or personnel or to
public property, loans, grants, benefits, or contracts.

(b) General notice of proposed rule making shall be published in the
Federal Register, unless persons subject thereto are named and either
personally served or otherwise have actual notice thereof in accordance
with law. The notice shall include —

(1) a statement of the time, place, and nature of public rule mak-
ing proceedings;

(2) reference to the legal authority under which the rule is pro-
posed; and

(3) either the terms or substance of the proposed rule or a de-
scription of the subjects and issues involved.

Except when notice or hearing is required by statute, this subsection does
not apply —

(A) to interpretative rules, general statements of policy, or rules
of agency organization, procedure, or practice; or

(B) when the agency for good cause finds (and incorporates the
finding and a brief statement of reasons therefor in the rules is-
sued) that notice and public procedure thereon are impracticable,
unnecessary, or contrary to the public interest.

(c) After notice required by this section, the agency shall give inter-
ested persons an opportunity to participate in the rule making through
submission of written data, views, or arguments with or without oppor-
tunity for oral presentation. After consideration of the relevant matter
presented, the agency shall incorporate in the rules adopted a concise
general statement of their basis and purpose. When rules are required by
statute to be made on the record after opportunity for an agency hear-
ing, sections 556 and 557 of this title apply instead of this subsection.

(d) The required publication or service of a substantive rule shall be
made not less than 30 days before its effective date, except —

(1) a substantive rule which grants or recognizes an exemption or
relieves a restriction;

(2) interpretative rules and statements of policy; or

(3) as otherwise provided by the agency for good cause found and
published with the rule.

(e) Each agency shall give an interested person the right to petition
for the issuance, amendment, or repeal of a rule.

Another provision of the APA ^" states that for these purposes

"rule" means the whole or a part of an agency statement of general or
particular applicability and future effect designed to implement, inter-

>» Administrative Procedure Act § 2(c). 5 U.S.C. § 551(4) (Supp. IV, 1969). On the defini-
tion of "rule" see 1 K. Davis, Administrative Law Treatise § 5.02 (1958).

REC. l(i. APA RULEMAKING EXEMPTIONS 311

pret, or prescribe law or policy or describing the organization, procedure,
or practice requirements of an ap:ency and includes the approval or pre-
scription for the future of rates, wages, corporate or financial structures
or reorpranization thereof, prices, facilities, appliances, services or allow-
ances therefor or of valuations, costs, or accounting:, or practices bearinp
on any of the foregoing.

The specific question to be examined here is whether section
553 satisfactorily accommodates the competing interests involved
insofar as it unqualifiedly exempts from the required rulemaking
procedures of that provision all rulemaking "relating to . . .
public property, loans, grants, benefits, or contracts." Because of
the strong societal interests in assuring public participation in
the rulemaking process, these section 553(a)(2) exemptions
may be justified only insofar as they are narrowly tailored to
preserve those other societal interests conflicting with the need
for public involvement in the process, in a degree related to
their comparative importance. That is, exemptions from an ob-
ligation imposed on agencies to implement public participation
in rulemaking should be countenanced only to the extent to
which they are absolutely necessary to preserve other values of
equal or greater importance.

The inquiry here is intentionally limited to the section 553(a)
(2) exemptions for "public property, loans, grants, benefits, or
contracts." The present study will not consider the merits of
any other exemptions contained in section 553. It will not, for
example, consider the section 553(b) (A) and section 553(d) (2)
exemptions for interpretive rules and statements of policy, the
section 553(a)(1) exemptions for "military or foreign affairs
function [s]," or the section 553(a) (2) exemption for "a matter
relating to agency management or personnel."

There are several reasons why this study will not even consider
the other section 553(a) exemptions just noted. The latter ex-
emptions involve problems that are distinctly separable from,
and more difficult to resolve satisfactorily than, those associated
with the former exemptions. The interests underlying the in-
clusion of the other exemptions in the statute are severable in
most respects from the interests said to justify the former. There
also seems to be greater demand for abolition of the "public
property, loans, grants, benefits, or contracts" exemption than
for the other unqualified section 553(a) exemptions. Moreover,
there is a greater willingness among the government agencies
involved to suffer a modification of these (a) (2) exemptions than
the others. Practically speaking, the military, foreign affairs,

312 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES

and agency management exemptions seem to be more impervious
to change than the section 553(a) (2) exemptions to be examined
here. Lastly, the exemptions on which this Article v^^ill concen-
trate can analytically be considered as a unit, separate from the
others; and of all the section 553(a) exemptions, they may do
the greatest damage with the least justification.

Of course, other exemptions contained in section 553 will be
scrutinized to the extent that this becomes necessary to analyze
properly the problem under consideration. The above discussion
is in no way meant to suggest that the exemptions for the military,
foreign affairs, and agency management functions are unrelated
to, or completely separable from, those section 553(a)(2) provi-
sions being examined here. Indeed, if reform is required in this
area, it may be difficult in the long run without some modification
of all these exemptions. For example, modification or elimination
of the contracts exemption in section 553(a) (2), should that prove
desirable, would still leave virtually all contracts for military pro-
curement excluded from section 553 under the military functions
exemption of subsection (a)(1). And elimination of the public
property exemption would still leave rulemaking relating to the
largest portion of federal property exempt, because it is owned
by the Department of Defense and used in the performance of
military functions.

However, an evaluation of the section 553 exemptions may be
made most satisfactorily in steps. If the "public property, loans,
grants, benefits, or contracts" exemption can be adequately dealt
with here, future studies may more easily be able to move on to
a dispassionate appraisal of the desirability of the other section
553 exemptions. The current study will, therefore, deal only with
these exemptions which will be referred to throughout the re-
mainder of this Article as the section 553(a)(2) or subsection
(a) (2) exemptions.

II. The Requirements of Section 553(b) -(e)

Subsections (b)-(e) of section 553 attempt to assure that the
public has an opportunity to participate meaningfully in the
rulemaking process. The provisions of section 553 (b) require
that an agency contemplating the issuance of a substantive rule "

** Section 553(b) (A) expressly exempts "interpretive rules, general statements of policy, or
rules of agency organization, procedure, or practice" from the notice requirements. See U.S.
Dept. of Justice, Attorney General's Manual on the Administrative Procedure Act 30
(1947) [hereinafter cited as Attorney Geinekal's Manual], stating that this restricts the
application of the notice and participation requirements in what is now §§ 553(b)-(c) "to
substantive rules issued pursuant to statutory authority" (citing a portion of the statute's
legislative history, S. Doc. No. 248, at 19).

REC. 1(5. APA RULEMAKING EXEMPTIONS 813

must publish a notice in the Federal Register of the proposed
rulemaking indicating the time, place, and nature of the public
rulemaking proceeding, and a statement of the specific legal au-
thority under which the rule is proposed.'- In addition, the agency
must include either the actual provisions of the proposed rule,
or a summary statement of the subjects or issues to which they
relate. The notice involved "must be sufficient to fairly apprise
interested parties of the issues involved, so that they may pre-
sent responsive data or argument relating thereto" as they are
entitled to do under the following subsection of section 553.'"'
The agency has the option of dispensing with such publication
in the Federal Register only if the notice requirement described
above is functionally satisfied because all "persons subject there-
to are named and either personally served or otherwise have
actual notice thereof in accordance with law."

After giving notice, agencies are required by section 553(c) to
accord interested persons a chance to participate in the partic-
ular rulemaking involved "through submission of written data,
views, or arguments with or without opportunity for oral pres-
entation." In practice, the precise procedure actually utilized

may take a variety of form: informal hearings (with or without a steno-
graphic transcript), conferences, consultation with industry committees,
submission of written views, or any combination of these. ... In each
case, the selection of the procedure to be followed will depend largely
upon the nature of the rules involved. The objective should be to assure
informed administrative action and adequate protection to private inter-
ests."

It must be reiterated, however, that according to the statute,
interested persons must at the very minimum be afforded an op-
portunity to submit "written data, views, or arguments with or
without opportunity for oral presentation." ^-'

An agency must review the materials presented to it in the
course of such public rulemaking proceedings and include in any
rules resulting from this process a statement of their basis and

•^ The House Report on the APA stated that "[t]he required specification of legal authority
must be done with particularity. Statements of issues in the general statutory languaKe of
legislative delegations of authority to the agency would not be a compliance with the section."
S. Doc. No. 248, at 258.

" S. Doc. No. 248, at 200, 258. See also California Citizens Band Ass'n. v. United SUtes.
375 F.2d 43, 48-49 (9th Cir. 1967), stating that the section requiring that notice be given
concerning contents of proposed rules of the administrative agency "does not require an
agency to publish in advance every precise proposal which it may ultimately adopt as a rule. . . .
A notice of rulemaking is sufficient if it provides a description of subjects and issues involvetl."

"Attorney General's Manual 31. The legislative history clearly indicates that § 553(c)
"leaves agencies free to choose from the several common types of informal public rule making
procedures, the simplest of which is to permit interested persons to submit written views or
data . . . ." S. Doc. No. 248, at 19.

" S. Doc. No. 248, at 200, 259.

314 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES

purpose.^^ Nevertheless, it is clear that the statute "does not re-
quire the formulation of rules upon the exclusive basis of any
'record' made in informal rulemaking proceedings." ^^ However,
where statutes require a particular kind of rule to "be made on
the record after an opportunity for an agency hearing" other
provisions of the Administrative Procedure Act outlining more
formal hearing requirements will govern that proceeding instead
of these informal section 553 provisions ; ^^ and in such a case,
the rule must be made on the formal "record" so adduced.

Neither the advance notice nor public participation require-
ments outlined above apply in those cases where "the agency
for good cause finds (and incorporates the finding and a brief
statement of the reasons therefor in the rules issued) that notice
and public procedure thereon are impracticable, unnecessary, or
contrary to the public interest." The provision just quoted will
be discussed in more detail later in this Article.

Two other subsections of section 553 impose conditions with
respect to rules and rulemaking that are operative even if the
notice and public participation requirements of section 553(b)-
(c) are not applicable because they come within the "good cause"
exception just noted. Section 553(e) insists that every agency
give interested persons "the right to petition for the issuance,
amendment, or repeal of a rule." The mere filing of such a peti-
tion does not, however, require an agency to engage in a public
rulemaking proceeding on that subject. ^^ The agency must act
on the petition in accordance with its procedures promulgated
under other provisions of the APA,-" and may grant such a peti-
tion, undertake public rulemaking proceedings in relation to it,
or deny the petition. The chief practical significance of this ex-
press right to petition requirement seems to be that the denial
of a section 553(e) petition is governed by the provisions of
section 555(e), which require a prompt notice of the denial "ac-
companied by a brief statement of the grounds. . . ." ^^

A further requirement may be found in section 553(d) relat-
ing to the time period that agencies must allow between the pro-

'* "The agency must analyze and consider all relevant matter presented. The required
statement of rules issued should not only relate to the data so presented but with reasonable
fullness explain the actual basis and objectives of the rule." Id. at 201, 259.

"Attorney Gejneral's Manual 31 citing Hearings on S. 67i, S. 675 and S. 918 Before a
Subcomm. of the Senate Comm. on the Judiciary, 77th Ckjng., 1st Sess., ser. 1, pt. 3, at 444
(1941) [hereinafter cited as 19Jtl Hearings), which is limited authority for the otherwise sound
conclusion of the Manual on this point because the testimony referred to is that of only a
single person. Commissioner C. B. Aitchison of the ICC).

"5 U.S.C. §§ 556-557 (Supp. IV, 1969).

19 Attorney General's Manual 38 ; S. Doc. No. 248, at 201, 260.

^^5 U.S.C. §§ 552(a)(1) (B)-(C) (Supp. IV, 1969) : S. Doc. No. 248, at 260.

=* Attorney General's Manual 39 (citing S. Doc. No. 248, at 201, 260).

REC. 16. APA RULEMAKING EXEMPTIONS 815

mulgation of a substantive rule and its effective date. It states
that the required publication of a substantive rule under section
552, the freedom of information provision of the Act, must be
made at least thirty days prior to the effective date.- The
thirty day notice provision, like the right to petition an agency
for the issuance, amendment, or repeal of a rule, is applicable
even if the public rulemaking procedures of section 553(b) -(c)
are not, because they are found to be "impracticable, unneces-
sary, or contrary to the public interest." -' Exceptions are provided
to this last noted time requirement, however, in those situations
where the substantive rule "grants or recognizes an exemption or
relieves a restriction." An exemption is also provided where the
agency decides, "for good cause found and published with the
rule," that such a minimum thirty day period between the time
of a rule's publication and its taking effect is unnecessary. This
last exemption will also be discussed in more detail later in the
Article.

III. Section 553 (b)-(e) in Relation to the
Subsection (a) Exemptions

The exemptions contained in section 553(a) for rulemaking
involving "a military or foreign affairs function," rulemaking
"relating to agency management or personnel," and rulemaking
relating to "public property, loans, grants, benefits, or con-
tracts" operate to exclude entirely, and without qualification, all
rulemaking in these categories from every provision of subsections
553(b) -(e). Consequently, none of the requirements imposed on
administrative agencies by the provisions previously discussed are
applicable to these specifically exempted classes of rulemaking.
This means, for example, that unless some other statute specifical-
ly directs the contrary,^* agencies making rules relating to "public

•^ See Attorney General's Manual 36, statiriK that "[t]he discussion on section . . .
[5r3(d)] in the reports of both the Senate and House Committees on the Judiciary makes
clear that the phrase 'The require<l publication or service of any substantive rule' does not
relate back or refer to the publication of general notice of proposed rulemaking re<iuired by
[§ 553(b)] ; rather it is a requirement that substantive rules which must be published in the
Federal Register [see § 553(a) (1) (D)] shall be so published at least thirty days prior to their
effective date." The language of § 553(c) does, of course, lend itself more readily to the op-
posite construction, but it seems to have been construed only in the manner suggested by the
Attoknf.y General's Manual. See also Landsen v. Hart, 168 F.2d 409 (7th Cir. 1948) : Task
Force Report 160. The legislative history referred to may be found in S. Doc. No. 248, at 201,
259.

" S. Doc. No. 248, at 200-01, 259.

" Another statute will control if it directs that certain kinds of rules relating, for example,
to loans, grants, or benefits be made in accordance with the requirements of §§ 553(b)-(e). See
5 U.S.C. § 559 (Supp. IV, 1969). The following statement made during the Congressional
hearings on the APA supports this conclusion : "These exceptions would not, of course, re-
lieve any agency from requirements imposed by other statutes." S. Doc. No. 248, at 199.

316 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES

property, loans, grants, benefits, or contracts" are never, under
any circumstances, obliged as a matter of law to do any of the
following things: (1) publish notice of proposed rulemaking in
the Federal Register according to specifications of section 553
(b) ; (2) give interested people a chance to participate in the
formulation of rules through submission of views or data, accord-
ing to the terms of section 553(c) ; (3) give interested persons
"the right to petition for issuance, amendment, or repeal of a
rule," according to the terms of section 553(e) ; or (4) publish
substantive rules at least thirty days before their effective date
as required by section 553 (d).-'^ The blanket language of section
553 (a) makes no allowance whatsoever for the possibility that
certain rulemaking within its terms may need to be exempted
from some of the subsection (b)-(e) requirements and not from
others. Similarly, this provision does not recognize that certain
rulemaking within its terms may need exemption from all of
those requirements and other such rulemaking from none of
them.

The exemptions currently found in section 553(a) obviously
proceed upon the assumption that a sweeping judgment can be
made concerning those categories of subjects. The policies
favoring public participation in rulemaking are outweighed by
the consequences of subjecting these particular classes of rule-
making to the requirements of subsections (b)-(e), or the con-
sequences of utilizing a more flexible approach to determine
whether, in any given case, they should be subjected to those re-
quirements. The validity of this assumption must be carefully
examined and tested with respect to the exemptions for "public
property, loans, grants, benefits, or contracts."

It should be stressed that in those cases where rulemaking is
excepted from the requirements of section 553 by subsection (a),
agencies may use any rulemaking procedure they please, with or
without public participation, unless another statute specifies the
contrary. The legislative history of the Administrative Procedure
Act clearly indicates, however, that none of the blanket introduc-
tory exceptions from the section "is to be taken as encouraging
agencies not to adopt voluntary public rule making procedures
where useful to the agency or beneficial to the public. The excep-
tions merely confer a complete discretion upon agencies to de-
cide what, if any, public rule making procedures they will
adopt in a given situation within their terms." -"

25 Attorney General's Manual 39 ; S. Doc. No. 248, at 199, 257.
2« S. Doc. No. 248, at 199, 257.

REC. IC). APA RULEMAKING EXEMPTIONS 317

However, the fact is that most agencies do not usually exercise
their discretion to follow the requirements of section 533 (b)-(e)
when they are not bound to do so. Consider agency practice with
respect to that rulemaking of primary concern here — rulemak-
ing relating to "public property, loans, grants, benefits, or con-
tracts." A survey prepared for this study, and distributed under
the auspices of the Rulemaking Committee of the Administra-
tive Conference of the United States during the summer of 1969,
asked each federal agency :

Does your department or agency follow the procedui'es specified by § 553
(b)-(e) for any rulemaking exempted from those provisions by § 553
(a) (l)-(2) ? If it does, list the particular kinds of rulemaking exempted
by § 553(a) (l)-(2) for which your department or agency has volun-
tarily chosen to follow some or all of the procedures specified by
§ 553(b)-(e). Explain. Also list the frequency with which it voluntarily
follows those requirements for such exempted rulemaking, and the spe-
cific circumstances under which it does so.

Responses to this question by those agencies reporting that they
make rules relating to "public property, loans, grants, benefits,
or contracts" -• indicate a pattern. Rulemaking excluded by this
part of subsection (a) (2) from the mandatory terms of section
553(b) -(e) usually will not be conducted according to those pro-
cedures. That is, most responding agencies indicated that they
do not normally follow the provisions of section 553(b) -(e) when
their rulemaking is excepted from them by subsection (a) (2).^*'
And while a number of agencies indicated that they engaged in a
contrary practice with respect to such rulemaking, most of these
admitted to some inconsistency in this regard.-"

-' The following agencies responded to the survey questionnaire prior to September 8, 1969,
and indicated that they made rules relating to "public property, loans, grants, benefits, or
contracts": Department of the Treasury; Small Business Administration; Department of
Agriculture ; Department of Defense ; Veterans' Administration ; Post Office Department ;
Department of Commerce ; Atomic Energy Commission ; Department of Transportation ;
Department of Labor ; the Department of Health, Education and Welfare ; Office of Economic
Opportunity ; and the National Aeronautics and Space Administration. It is the responses
of the above agencies that will be discussed in this study [hereinafter cited as 1969 Survey].

=* See, e.g.. the following responses to the 1969 Survey question. The Atomic Energy Commis-
sion reported that "The A. E.G. does not follow the procedures specified by 5 U.S.C. 553(b)-(c)
for the rulemaking . . . which is exempted from such procedures." The Small Business Admin-
istration reported that "S.B.A. does not, as a general rule, follow the requirements of notice
of proposed rulemaking and public participation for programs exempt from section 553, al-
though some qualifying comment may be appropriate." The Department of Health, Education
and Welfare reported that "the Department has followed the procedures specified by 5 U.S.C.
553(b)-(e) for rulemaking exempted from those provisions by § 553(a) (2), on occasion. . . ."
The Department of Defense and the Veterans' Administration answered "No," and the
Department of Agriculture's various divisions indicated that they rarely, if ever, followed
usual §§ 553(b)-(e) procedures in cases of rulemaking exempted by § 553(a)(2).

-^ See, e.g., the following responses to the 1969 Survey question. The Post Office Department
stated that "The Department normally follows the procedures of sec. 553(b)-(e) for any rule-
making leading to the adoption of regulations relating to domestic mail service when it is
considered that the regulation may have a substantial or adverse effect on the public. ... By

318 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES

Not only do ag-encies generally fail to follow the procedures of
section 553(b) -(e) in most cases where they are not required to
do so, but the public rulemaking procedures actually utilized by
administrators in the excepted situations are frequently inade-
quate substitutes for those found in section 553(b')-(e) .^" The
survey prepared for this study asked reporting agencies :

What rulemakiner procedures does your department or ag^ency use in those
cases where rulemaking: is exempted by §553 (a) (l)-(2) from the re-
quirements of § 553(b)-(e) and it does not choose, in its discretion, to
follow § 553(b) -(e)? Be as specific as possible. Include a concrete ex-
ample of each of the different kinds of rulemaking procedures utilized by
your department or agency when it does not follow § 553(b) -(e) be-
cause th3 rulemaking involved is exempted by § 553(b) (l)-(2).

Responses indicate that substitute procedures are not always con-
sistent and do not, in many cases, assure adequate notice to affect-
ed parties and a sufficient opportunity for their participation. In
some cases, the agencies may simply determine the rule they
think appropriate and promulgate it, without first notifying or
consulting with anyone outside the Government. In other such
cases, agencies give notice to, and engage in informal consulta-
tion with, whomever they happen to think appropriate under the
circumstances.''^ The actual procedures utilized in those cases

way of illustration it was undertaken on twelve occasions during 1968." However, much rule-
making relating to Post Oflfire contracts and the management of Post Office property seems
not to be subjected to usual § 553 requirements. The Department of Transportation stated that
"With respect to Parts 151, 153. 155, 159, 165, 167, and 169 of title 14, C.F.R. ... the Depart-
ment does follow all of the section 553 rulemaking procedures, even though exempted therefrom
under 553(a)(2), except for minor or technical amendments." However, this means that it
does not follow § 553(b) -(e) with respect to rulemaking relating to other Department pro-
grams which it lists as exempted by the § 553(a)(2) exceptions under study here. The De-
partment of Commerce reported that some of its divisions, like the Office of State Technical
Services, usually follow § 553(b)-(e) in cases exempted by subsection (a)(2) ; while others,
like the Domestic and International Business Division, do not. The Department of Labor also
indicated that it usually follows §§ 553(b)-(e) with respect to rulemaking of general
applicability.

'"Imposition of the §§ 553(b) -(e) requirements on rulemaking currently excluded from the
ambit of those provisions by § 553(a) (2) has been opposed by some agencies on the grounds
that it is unnecessary as applied to them. They maintain that substitute procedures actually
utilized assure adeiiuate notice and participation. Sec e.g.. Hearings on S. 1663 Before the
Subcomm. on Administrative Practice and Procedure of the Senate Coinin. on the Judiciary,
88th C<)ng., 2d Sess. 20-22 (General Services Administration) and 494-95 (Dept. of Defense)
(1964) [hereinafter cited as S. 1663 Hearings']. See also Hearings on S. 518 Before the Sub-
comm. on Administrative Practice and Procedure of the Senate Comm. on the Judiciary, 90th
Cong., 1st Sess. 246, 379 (1967) (Veterans' Administration, Dept. of Interior) [hereinafter
cited as S. 518 Hearings]. These are not, of course, disinterested judgments, and their validity
is, therefore, disputable.

'' See, e.g., the following responses to the 1969 Survey question. The Small Business Admin-
istration reported that "parts 112 and 113 Nondiscrimination in Financial Assistance Programs
of S.B.A., were prepared internally, but cleared with the Department of Justice. . . . Rules
setting forth the policies, proceedings, and requirements for loan, procurement, and other
assistance programs are also prepared internally. But in many cases the programs will re-
quire or be substantially fostered by contribution from non-governmental sources." The Post
Office noted that "when statutory procedures are not used the Department develops its
regulations through informal discussions with those to be affected, by negotiation, or by internal

REC. Ui. APA RULEMAKING EXEMPTIONS 319

where agencies are not required to follow section 553 because of
subsection (a) (2) may, therefore, often result in a failure to
invite interested persons to participate in the formulation of a
rule.^-

Some agencies do utilize substitute procedures that in fact as-
sure adequate notice to affected parties, and a sufficient opportu-
nity for their participation. In a number of cases, those substitute
procedures have been specially instituted to cure, at least partial-
ly, the failure of section 553 to cover rulemaking relating to
"public property, loans, grants, benefits, or contracts." Chief
among these is a procedure announced by the Bureau of the Budg-
et in Circular No. A-85 on June 28, 1967. This document applies
to most "regulations and revisions thereof which implement a
Federal Assistance Program that includes among its eligible re-
cipients state or local governments or quasi-public agencies." " It
provides that an agency shall give the Advisory Council on Inter-
governmental Relations (ACIR) a copy of each such proposed
regulation at least 45 days before it is to be promulgated. If legal
or other circumstances make this impossible, the agency is to
advise the ACIR of this fact, and at least provide it with a sum-
mary or abstract in lieu of the regulation.^* The ACIR is then
to transmit copies of such materials to a number of specific state
and local government associations such as the National Gover-
nor's Conference, Council of State Governments, and the Unit-
ed States Conference of Mayors, who will then have up to three

decision-makinpr processes." The Department of Agriculture's Rural Electrification Agency
reported that "R.E.A. Bulletins are formulated by staff members responsible for the program
aspects involved in the proposed bulletin with final review and approval by an Assistant Ad-
ministrator, Deputy Administrator, or the Administrator. Within the discretion of R.E.A. ,
drafts of bulletins may be discussed informally with representatives of borrowers, contractors,
engineers, and other parties interested in R.E.A. programs prior to issuance." The Production
Stabilization Division of the Department of Agriculture noted that "almost without exception,
the final regulation is published in the Federal Register without prior notice . . . ." The same
Department also stated that new rules "are prepared by the Farmers Home Administration
National Office, with the advice and assistance of the Office of the General Counsel of this
Department. . . . Field employees are in daily contact with Farmers Home Administration
borrowers and other recipients of Farmers Home Administration assistance and are fully
cognizant of their needs and views. Field employees are many times called upon to serve on
committee or submit their comments in connection with the development or revision of F.H.A.
instructions of major significance." See also responses to a somewhat similar survey (luestion
supporting the same point in Bonfield, Representation for the Poor in Federal Rulemaking, 67
Mich. L. Rev. 511, ,'547, nn. 41 and 42 (15"69) (hereinafter cited as Bonfieldj.

" Officials of a number of major organizations purporting to represent some segment of the
poor have complained, for example, of inadequate notice with respect to proposed rules of
interest to them, and of many agencies' lack of interest in ascertaining their views in re-
lation to rulemaking affecting the poor. A number of federal agencies have also tactily admitted
that current rulemaking proce<lures utilized in some rulemaking relating to the subjects ex-
empted by § 553(a) have been inadequate to assure sufficient representation for the poor in
federal rulemaking. See Bonfield 518-19.

" B.O.B. Circular No. A-85, § 4 (June 28, 1967).

"/d. § 5(a).

320 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES

weeks within which to comment to the federal agency involved
on the proposed regulation.^^

As helpful as BOB Circnlar A-85 may be, it is no substitute for
the more broadly applicable requirements of section 553(b) -(e).
The protections of the former scheme do not, for example, apply
to rulemaking relating to grants made exclusively to private
parties or organizations. Moreover, Circular A-85 fails to assure
a very large number of "interested" or "affected" persons notice
of, or an adequate opportunity to participate in, rulemaking of
the type covered by that document for two reasons. In the first
place, the document assumes that the procedure contained therein
will only apply to that rulemaking "significant enough to be put
through the consultation arrangements," leaving it to the discre-
tion of the agencies to decide which rulemaking is significant.
The BOB effort does not even supply a standard to measure what
is to be considered "significant" for this purpose. Secondly, the
Circular in question does not assure many interested persons no-
tice and an opportunity to participate in the regulation making
within its terms. Rather, it provides notice and a chance to com-
ment only to certain state and local government associations and,
through them, to their members. As the ultimate beneficiaries of
particular federal programs granting aid to state and local gov-
ernments, many classes or groups of citizens have a vital interest
in regulations relating to these programs. Their interests, on oc-
casion, may be different from, or even in opposition to, the inter-
ests of the political heads of state and local governments whose
participation in rulemaking is sought to be protected by this
scheme. Yet interested citizens are not assured advance notice
or an opportunty to participate in such rulemaking relating to
federal grants by BOB Circular A-85.

In the end it must be reiterated that the exemption for "public
property, loans, grants, benefits, or contracts" results in a situa-
tion in which interested persons are frequently denied notice of,
and an adequate opportunity to participate in, rulemaking of
concern to them. To the extent this occurs in any case without a
justification sufficient to warrant that result, it should not be
tolerated. As noted previously, the reasons supporting the section
553(b) (e) requirements for public participation in rulemaking
are very compelling. The potential damage to sound government
policy formulation and private rights is great in any case where
such participation is not assured. The scope and importance of the

3«7d. § 5(c).

REC. l(i. APA RULEMAKING EXEMPTIONS 321

subsection (a) (2) exceptions, and the reasons advanced for
their existence must, therefore, be examined with special care.

IV. The Section 553 (a) (2) Exemptions: Their Scope and
Practical Importance

A. Generally

A few general comments should be made about the linguistic
form in which the subsection (a) (2) exemptions are cast. By
their terms, these exclusions only apply "to the extent that there
is involved" rulemaking that is related to "public property,
loans, grants, benefits, or contracts." The legislative history em-
phasizes the "to the extent" language, stating that these exemp-
tions "apply only 'to the extent' that the excepted subject mat-
ter is clearly and directly involved." ^^ This suggests that where an
agency makes some rules coming within the introductory exemp-
tions and some rules that do not, it may ignore the procedures
of subsections 553 (b)-(e) in the former cases but must follow
them in the latter cases. Even a single scheme of proposed regula-
tions must abide by this principle if it is practically divisible
into particular provisions which involve excluded functions and
ones that do not. In the report of the Senate Committee on the
bill that was to become the Administrative Procedure Act, the
Committee stated that :

[l]t has avoided the mistake of attempting to oversimplify the measure.
It has therefore not hesitated to state functional classification and excep-
tions where those could be rested upon firm grounds. In so doing, it has
been the undeviating policy to deal with types of functions as such and
in no case with administrative agencies by name. Thus certain war and
defense functions are exempted, but not the War or Navy Departments
in the performance of their other functions."

Every federal agency is exempted from the usual section 553
requirements to the extent that they perform the listed functions.
Drafters of the statute stated that " [w]here one agency has shown
that some particular operation should be exempted from any
particular requirement, the same function in all agencies has
been exempted." '^ Moreover, the purpose or effect of the rules
relating to any of the excepted subjects is irrelevant since all such
regulation making is excepted from section 553 by subsection
(a)(2). Similarly, the type or quantity of public property in-
volved, or the use to which it is put, and the subject or reason for

^ S. Doc. No. 248, at 257. See also id. 199.
" Id. 191.
»/d. 250.

322 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES

the loans, grants, benefits, or contracts are also immaterial for
purposes of this all-encompassing exemption.

On the other hand, rulemaking is arguably not exempt under
subsection (a) (2) unless it "clearly and directly" relates to
the excluded subject matter. ^^ This wording suggests that rule-
making only indirectly or tangentially related to the exempted
subjects is not to be treated as within the exclusions, and that
unclear, close, or doubtful cases shoul be treated as outside the
exemption. Although the lack of the emphatic word "clearly" in
the Senate Report somewhat dilutes this argument, there are
strong reasons to construe the introductory exceptions narrowly.
Most important is the fact that the subsection (a) (2) exclusions
are in the form of broad, unqualified exceptions to provisions
implementing a very important general governmental policy favor-
ing public participation in rulemaking, and those usually opera-
tive provisions individually contain special detailed exemptions
for peculiar cases. Moreover, a principal reason for the enact-
ment of the APA was to secure some standardization of adminis-
trative procedure.'*° Exceptions from any of its provisions should,
therefore, usually be construed narrowly in order to achieve that
result.

Nevertheless, the language of the section 553(a) (2) exemp-
tions is very broad. Not only are the listed subjects that are ex-
cluded specified in terms easily susceptible to wide application,
but to be exempted the rulemaking in question must only involve
"a matter relating to" the specified subjects. An attempt to mini-
mize the significance of the "relating to" language in subsection
(a) (2) of the statute can be made by arguing that there is little
if any diff'erence between rulemaking where there is "involved" a
certain stipulated matter and rulemaking where there is "involved
a matter relating to" that stipulated matter. Since there is ordi-
narily a diff"erence in meaning between these phrases, and the
inclusion of the phrase "relating to" in subsection (a) (2) is un-
necessary except as a contrast to the subsection in which it is
omitted, a conclusion that the usage only constitutes a choice of
style and does not affect content seems difficult to accept.

The following discussion will attempt to state the main thrust
of each of the section 553(a) (2) exemptions, and provide some
illustrative examples of rulemaking they are deemed to ex-

'^ Id. 199, 257. "Directly" is the language from the Senate Report on the APA and "clearly
and directly" from the House Report.

*' McFarland, Analysis of the Federal Administrative Procedure Act, in Federal Administra-
tive Procedure Act and the Administrative Agencies 22 (G. Warren ed. 1947). See also
S. Doc. No. 248, at 187, 249.

REC. 16. APA RULEMAKING EXEMPTIONS 323

elude."' And assessment will also be made of the importance of the
rulemaking excluded by subsection (a) (2) from the usual require-
ments of section 553, and the urgency and care with which these
exemptions must be examined in order to ascertain whether they
are justified.

No attempt will be made in the following discussion to furnish
any mutually exclusive definition of each of the several terms
"public property, loans, grants, benefits, or contracts" used in
section 553 (a)(2). Rather, as noted above, the main thrust of
each term as commonly understood in everyday government
parlance will be described. There are two reasons why no effort
will be made to delineate precisely each term from every other
term. First, such an effort seems unnecessary for present pur-
poses. If rulemaking comes within the ambit of any one of these
terms, it is exempt from usual rulemaking procedures under sub-
section (a)(2). Second, five neat and mutually exclusive cate-
gories cannot easily be drawn from the above terms. Upon close
examination, each of them overlaps at some point with one or
more of the other of these exemptions. A particular instance or
class of rulemaking may well fit within two, three, or even more
of the above categories. Many agencies acknowledged this overlap
between the terms "public property, loans, grants, benefits, or
contracts" in responses to the survey prepared for this study. A
very large number of agencies listed rulemaking which they con-
sidered to be exempted from section 553 by subsection (a) (2)
as fitting within two or more of the terms listed in that exclu-
sion. ""^

*^ Data with respect to the way in which administrators actually construe these exemptions
in their every day aflfairs has been obtained from the survey questionnaire distributed as part
of this study to all federal agencies. One question asked was ;

What rulemaking does your department or agency engage in that is exempted from the
requirements of §§ 553(b)-(e) by §§ 553(a) (l)-(2) ? Be as specific as possible by listing
the particular programs you administer whose rulemaking is exempt, and for each such
program the particular part or parts of §§ 553(a) (l)-(2) under which it is exempted.
Where some rulemaking for a particular program is exempt and some are not, indicate
which kinds of rulemaking for that program are exempt and which kinds are not. Very
briefly describe the purpose of each such exempted or partially-exempted program and
provide citations to the statutes under which it is administere*!.
Most of the illustrations of exempted rulemaking used in the following section are drawn from
the responses to this questionnaire.

*2 The extent to which the terms used in subsection (a)(2) may overlap can best be under-
stood by the following examples. A loan of federal funds might be deemed to involve "public
property" as well as "loans" because the money being loaned is property of the national
government. The same may be true of grants of federal monies and benefits paid out of govern-
mental resources. A loan also may be considered within the "contracts" exemption because
the government lends money in consideration of the borrower's promise to return it. The
same may be said of grants because the United States usually gives them on certain conditions
which the grantee accepts when he voluntarily takes and uses the grant. A benefit might
also be deemed to fit within the "contracts" exemption as well as that for "benefits" when
it is given because of previous financial contributions which were made with the understanding

324 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES

B. Public Property

Rulemaking involving any "matter relating to . . . public prop-
erty" is the first section 553(a) (2) exemption of concern to this
study. The 1947 Attorney General's Manual on Administrative
Procedure stated that this exclusion "embraces rules issued by any
agency with respect to real or personal property ovv^ned by the
United States or by any agency of the United States. . . . The
term 'public property' includes property held by the United States
in trust or as guardian ; e.g., Indian property." *^ The legislative
history of the APA directly supports this assumption." Con-
sequently, the term "public property" would seem to have a broad
content, exempting from section 553 rules relating to any form
of property held by the United States in almost any capacity.

Although an argument has been made that the "public prop-
erty" exemption only applies to property held by the United
States in a "proprietary" capacity,*'' such a position has very
little to recommend it. Aside from the difficulty in distinguish-
ing a "proprietary" capacity from other capacities because the
content of that term is illusory at best,**' neither the language nor
legislative history of the Act support any such limitation. The
little evidence mustered to support this view can be easily ex-
plained on grounds other than an intent to achieve that result.*^

The areas into which it has been argued that the "public prop-
erty" exemption should reach are considerably more varied than
one might expect. For example, a question arose over whether
regulations concerning wild birds under the Migratory Bird
Treaty Act were subject to what is now section 553 ; that is,
were wild birds "public property" so that regulations relating to

that subsequent benefits would be paid. Similarly, rulemaking relating to "grants" and rule-
making relating to "benefits" may overlap. Aside from any initial difficulties in distinguishing
those terms, the United States frequently gives grants to the states to finance benefit pro-
grams as, for example, in the Aid to Families with Dependent Children Program. Federal
rulemaking relating to that program may well relate both to "grants" and "benefits" since
the benefits ultimately paid to the recipients under the program may well be considered federal
benefits for purposes of § 553(a) (2).

43 Attorney General's Manual 27.

"S. Etoc. No. 248, at 257.

45 Wheatley, A Study of Administrative Procedures — The Department of Interior, 43 GEO. L.J.
166, 177-80 (1955). The floor manager of the APA in the House stated that "the exemption
of proprietary matters is included because in those cases the Government is in the position
of an individual citizen and is concerned with its own property, funds, or contracts." S. Doc.
No. 24, at 358. See also id. 199 (stating that the § 553(a) (2) exemptions deal with "pro-
prietary matters").

■** Proprietary is defined as "held as the property of a private owner ; relating or belonging
to a proprietor." Webster's Third New International Dictionary 1819 (1966). See also
Black's Law Dictionary 1384 (rev. 4th ed. 1968).

*' The legislative history relied on was undoubtedly intended to constitute simply an explana-
tion of why the public property exclusion was included, or to serve as a shorthand means of
designating these exclusions, and in no way intended as a limitation upon them.

REC. 1(5. APA RULEMAKING EXEMPTIONS 325

them were exempt from the usual rulemaking requirements?
After noting that at common law wild animals are the property
of the state in which they are found, the Department of Interior
in a memorandum opinion stated:

As have been shown, the cases which speak of title to or ownership of wild
animals or birds placed the title or ownership in the states, not in the Fed-
eral Government. The exception of "public property" from the purview of
[APA] section 4 extends only to property of the United States. Conse-
quently, the exception would not cover rules regulating the taking of wild
game on lands other than those of the Government.*"

The Post Office has also been very much involved with the
"public property" exemption. In Doehla Greeting Cards, Inc. v.
Summer field,'*'' plaintiff challenged an increase in postal rates.
One of his grounds for the suit was that the Interstate Commerce
Commission had not held a hearing in conformance with usual
procedures prior to giving its required consent to the postal rate
increase. The court replied that "the hearing provisions of the
Administrative Procedure Act ... § 4 ... do not apply, as mail
rates are within the second exception, 'any matter relating to
agency management or personnel or to public property, loans,
grants, benefits, or contracts'." •" While the court was not clear
as to which of the particular exceptions in section 553(a)(2)
applied to the setting of mail rates, it was probably referring
to the "public property" exemption. Many cases have suggested
that the United States has a "property right" and a "proprietary
interest" in the postal service."

The cases which would support such a theory could be distin-
guished from the present question because they were concerned
with the reach of federal power to protect, foster, and regulate
the postal system rather than the extent to which postal
authorities were exempted from the usual public rulemaking

•'SM-34864 to the Director, Fish and Wildlife Service (Feb. 18, 1947), quoted in Wheatley, A
Study of Administrative Procedures — The Department of the Interior, 43 Geo. L.J. 166, 177
(1955).

«116 F. Supp. 68 (D.D.C. 1953).

«> Id. 75.

^^ See generally Delaney, The Federal Administrative Procedure Act and the Post Office De-
partment, in Federal Administrative Procedure Act and the Administrative Agencies 200-03
(G. Warren ed. 1947) (citing In re Deba. 158 U.S. 564, 583 (1895)) ; Searight v. Stokes, 44
U.S. (3 How.) 151, 169 (1845) ; Electric Bond and Share Co. v. S.E.C., 92 F.2d 580 (2d Cir.
1937) : Boeing Air Transport v. Farley. 75 F.2d 765 (D.C. Cir. 1935) ; Union Pacific R. Co.
V. United States, 219 F. 427 (8th Cir. 1915) ; United States v. Atlantic Coast Line R. Co., 215
F. 56 (4th Cir. 1914) ; Cushman, National Police Power Under the Postal Clause of the Con-
stitution, 4 Minn. L. Rev. 402 (1920) ; Note, Legislation, the Expanding Postal Power, 38
CoLUM. L. Rev. 474, 478 (1938)). See also Staff of House Comm. on Government Operations,
85th Cong., 1st Sess., Sur%-ey and Study of Administrative Organization, Procedure and
Practice in the Federal Agenoes 861-63 (Comm. Print 1957) [hereinafter cited as 1957 House
Study].

326 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES

requirements. Nevertheless, distinctions of this kind seem to be
considered irrelevant. At the time of the APA's adoption the
Assistant Solicitor General of the United States informed the
Solicitor of the Post Office Department that :

I have noted the judicial decisions cited in your letter and which emphasize
the proprietary interest of the Federal Government in the postal system. It is
well known that the United States owns the post office properties and facili-
ties, and that the postal deficits are met by appropriated funds. I concur in
your opinion that rules issued by the Postmaster General to prescribe the
rates, zones, weight limits, and similar conditions upon which mail service is
rendered to the public, involve only matters relating to public property, and
are accordingly exempt from the provisions of Section 4 of the Administra-
tive Procedure Act."

Further clarification of the extent of the meaning of "public
property" can be gleaned from the Attorney General's Manual.
The Manual states, by v^ay of example, that under the exemption
for "public property" rulemaking that relates to

the public domain, i.e., the sale or lease of public lands or of mineral, tim-
ber or grazing rights in such lands, is exempt from the requirements of
section 4. The exemption extends, for example, to rules issued by the Ten-
nessee Valley Authority in relation to the management of its properties,
and by the Maritime Commission with respect to ships owned by the
United States."

Some other examples of rulemaking deemed exempt from section
553 by the "public property" provision include rulemaking under-
taken by the General Services Administration relating to the
management and use of public buildings, surplus federal prop-
erty, and stockpiled materials ; rulemaking undertaken by the
Department of Agriculture relating to the use and disposition of
farm surplus commodities and the national forest system lands ;
rulemaking undertaken by the Department of the Interior relat-
ing to the use of the National Parks; and rulemaking under-
taken by the Department of Transportation relating to the use
and occupancy of the national capital airports.

The subject matter removed from usual rulemaking require-
ments by this provision is staggering in size both absolutely and
in relation to our national resources. Consider the following data
with regard to the different types, quantities, and values of fed-
eral property, the making of rules in relation to which is excluded
from usual requirements for advance notice and public participa-
tion. On June 30, 1966, the federal government owned a total of
$347 billion in real and personal property which was controlled

" Delany, supra note 51, at 202.

53 Attorney General's Manual 27.

REC. 16. APA RULEMAKING EXEMPTIONS 327

by various agencies. Of this amount, $102.6 billion represents the
estimated value of real property in the possession of the United
States. '^ Federal land holdings amounted to a total of 764,762,000
acres representing 33.7 '^r of the total land area of the country.
They constituted as high a percentage of total area as 97%,
86%, 67%, and 64 ^^ in Alaska, Nevada, Utah, and Idaho respec-
tively.'' In addition, the federal government owned some 423,634
buildings containing a total of about 2.5 billion square feet
of space.''' The remaining portion of federal property consisted
of personalty holdings of all kinds including machinery and equip-
ment, commodities, materials and supplies, and accounts and
loans receivable, which were valued at $244.4 billion. Of this,
$3.4 billion represented the value of commodities for sale by the
national government."

The "public property" of the United States can be roughly
classified on a functional use basis. The following table shows
the primary breakdown on this basis as of June 30, 1966.^®

TABLE A

Functional Use of "Public Property" as of June 30, 1966

National Defense Purposes $208.5 billion

International Affairs & Finance 26.4 billion

General Government Purposes 22.6 billion

Agriculture & Agricultural Resources 12.8 billion

Commerce and Transportation 11.2 billion

Education 5.7 billion

Housing & Community Development 4.6 billion

Space Research & Technology 3.8 billion

Veterans' Benefits & Services 3.4 billion

Health, Labor & Welfare 798.0 million

As the above table clearly indicates, the impact on the daily
lives of millions of Americans from regulations governing the
management, use, and disposition of these vast governmental as-
sets is enormous.

C. Loans

The exemption for rulemaking involving matters relating to
"loans" covers a very wide spectrum of government policy-

" Staff of House Comm. on Government Operations, 89th Cong.. 2d Sess., Federal Real
AND Personal Property Inventory Report (Civilian and Military) of the United States
Government Covering its Properties Located in the United States as of June 30, 1966.
at 11 (Comm. Print 1966) [hereinafter cited as Property Inventory Report].

" 1968 Statistical Abstract of the United States 194 [hereinafter cited as Statistical
Abstract].

"* Property Inventory Re3>ort 247.

»Wd. 11.

«7d. 12-13.

328 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES

making. The term "loan" covers "something lent for the borrow-
er's temporary use on condition that it or its equivalent be re-
turned." -'^ "Loan" covers an "advance of money with an absolute
promise to repay," a "[b] ailment without reward, consisting of
the delivery of an article by the owner to another person . . . and
returned either in specie or in kind," and may either be with or
without interest or other similar charge payable to the lender by
the borrower.^"

Two examples of how the "loans" exception would operate in
practice will illustrate its breadth. It seems obvious that this
exception would make the rulemaking requirements of section
553 inapplicable to the usual functions of government lending
agencies, ^^ including their programs which seek to guarantee
loans, "since they are matters relating to public loans." ^^ Not
surprising then is the holding in Barrington Manor Apartments
Corp. V. United States/'^ Plaintiff alleged that a Federal Housing
Administration regulation, providing that a one per cent prepay-
ment penalty would be levied on all mortgages held by that
agency in cases where they were paid before due, was invalid
since it was not adopted in accordance with the rulemaking re-
quirements of section 553. The court rejected this argument be-
cause the lending functions conferred on the FHA by the statute
under which the regulation was promulgated were excluded from
those requirements by the operation of section 533 (a) (2) .^*

Although the above example was a fairly clear case, another
illustration demonstrates the extent to which a regulation need
only "relate to" loans made by the government to be considered
within the subsection (a) (2) exemption. Stroud v. Benson ^'^ in-
volved the question whether an order of the Secretary of Agricul-
ture requiring identification of varieties of tobacco on the auc-
tion warehouse floor was a rule subject to the procedures of
section 553. The Secretary issued an order requiring such identi-
fication without prior notice or public participation, on the
grounds that it was "a matter relating to" the loan and price

^^^ Webster's Third New International Dictionary 1326 (1966).

«* Black's Law Dictionary 1085 (rev. 4th ed. 1968).

*^ Reich, Rulemaking Under the Administrative Procedure Act, in Federal Administrative
Procedure Act and the Administrative Agencies 498 (G. Warren ed. 1947).

" Attorney General's Manual, supra note 11, at 27.

"392 F.2d 224 (Ct. CI. 1968).

8*/d. 227. The court cited Grymes Hill Manor Estates v. United States, 373 F.2d 920, 923
(Ct. CI. 1967) for the same proposition. That case also held that the function of the F.H.A.
pursuant to the statute under which the regulation was promulgated was exempted from the
§ 553 requirements by subsection (a) (2). The opinion is not explicit as to which of the (a) (2)
exemptions was involved, but it may be implied that the court was referring to the term "loans."

«M55 F. Supp. 482 (E.D.N. C. 1957).

REC. 16. APA RULEMAKING EXEMPTIONS 329

support program for tobacco. The court affirmed the Secretary's
judgment and justified the relationship because

it has been found as a fact that failure to identify the discount varieties
on the warehouse floor has and will tend to depress the tobacco market. A
depression of the open market price below the level of the support price
would ultimately result in the increase of government loans and conse-
quently government loan stocks. The instant order is directly related to
this contingency."'"'

This case illustrates the very broad possibilities of an exemption
couched in terms of "a matter relating to . . . public . . . loans."

The very great variety and quantity of important government
rulemaking activities exempted by the "loans" language from the
requirements of section 553 can best be appreciated by enumerat-
ing some of those programs to v^^hich it applies. The Attorney
General's Mamml states that this exemption applies to "rules
issued with respect to loans by such agencies as the Reconstruc-
tion Finance Corporation, the Commodity Credit Corporation,
and the Farm Credit Administration. It also exempts rules re-
lating to guarantees of loans, such as are made by the Federal
Housing Authority and the Veteran's Administration, since they
are matters relating to public loans." *■'' Other specific rulemaking
deemed exempt from the usual notice and public participation
requirements of section 553 because it relates to "loans" includes
rulemaking by: (1) the Department of Transportation involv-
ing loans to assist financing, acquisition of, or capital improve-
ments to, urban mass transportation systems; (2) the Small
Business Administration involving loans to state and local de-
velopment companies, economic opportunity loans, business loans,
and disaster loans; (3) the Department of Health, Education
and Welfare involving loans under the National Defense Educa-
tion Act; (4) the Department of Agriculture relating to loans
in the price support programs, loans for rural electric and tele-
phone systems, loans for farm operating needs, farm ownership
loans, and soil and water conservation loans; and (5) the De-
partment of Housing and Urban Development relating to loans
to finance low and moderate income housing, loans to assist re-
habilitation of housing in urban renewal areas, and loans for
rental housing for senior citizens. Of course, while the above
listing includes some of the more important areas, it is in no way
exhaustive for any one agency or all agencies.

To get an idea in economic terms of the size, diversity, and im-
portance of the national government's loan operations, and the

««/(£. 490.

"Attorney General's Manual, supra note 11, at 27.

330 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES

extent to which they are a significant factor in our economy
and lives, consider the following data. In 1968, $57.2 billion in
direct federal loans and $108.1 billion in guaranteed federal
loans were outstanding.''^ The same year, $25,2 billion in new direct
federal loans and $21.9 billion in new guaranteed federal loans
were made.*'^ In 1968, the Bureau of the Budget projected that the
amount of outstanding guaranteed and insured loans would in-
crease by some $12.7 billion in 1969 and by a record $20.6
billion in 1970.'° By the end of 1970, $190.6 billion in loans directly
made or guaranteed by the United States will be outstanding,'^
Excluding foreign loans, direct loans made by the United States
in 1966 were broken down into the following functional cate-
gories and amounts : "

TABLE B
Direct Loans by the United States in 1966

Category of Use Amount

Agriculture $7.9 billion

Education 3.1 billion

Homeowners 3.0 billion

Industry 978.2 million

States, territories, etc. 855.8 million

Financial institutions 1.9 million

Other loans 675.8 million

In important industries like housing and agriculture federal loans
or guarantees of private loans account for an enormous part of
the credit available for financing such activities.

The above data make it clear that direct federal loans and
federal guarantees of private loans play a very large and vital
role in our national government's efforts to (1) improve housing
and encourage homeownership, (2) develop agriculture and other
natural resources, (3) promote business, especially exports, trans-
portation, and small business generally, (4) redevelop communi-
ties and regions, and (5) aid higher education."^ Consequently,
the section 553(a)(2) exemption relating to "loans" excludes
from the usual requirements of notice and public participation
rulemaking having a vital and enormous impact on the public at
large, and specifically bearing on many of the most pressing
domestic problems facing our nation.

*' U.S. Bureau of the Budget, Special Analysis, Budget of the United States, Fiscal
Year 1970, at 62 [hereinafter cited as Speoal Analysis],
«»/d. 57.
w/d, 63,
"/<i. 61.

" Propekty Inventory Report 19.
" Special Analysis 54.

REC. Hi. APA RULEMAKING EXEMPTIONS 331

D. Grants

The exemption for rulemaking related to "grants" principally
refers to a situation in which the government gives something
to a recipient, such as money or land, to enable him to do a
particular thing. The main thrust of the "grants" exclusion is
tov^ard cases where the United States makes a gift of property
on the condition that the recipient use it or its proceeds to
achieve a specific object. As used in section 553(a)(2), "grants"
covers all "subsidy programs" and "grants-in-aid programs under
which the Federal Government makes payments to state and
local governments" and private individuals and entities.'* The
subject or object of the grant and its terms and conditions are
irrelevant.

The number of such grant programs is very large and their
objects numerous, as the following diverse examples will illus-
trate. The Department of Labor administers grants seeking to
secure vocational rehabilitation for migrant workers, and grants
for the administration of unemployment insurance and employ-
ment service programs. The operation and construction of ships
and dissemination of technological information throughout Amer-
ican business are the subjects of grants by the Department of
Commerce. Much highway construction results from grants made
by the Department of Transportation. The Department of Agri-
culture supports through grants such diverse programs as those
involving school meals, agricultural conservation, and community
water and sewer systems. The Department of Health, Education
and Welfare makes various kinds of grants to aid the construc-
tion and equipment of elementary, secondary, and other educa-
tional institutions, as well as to support health related research,
the construction of health related facilities, child welfare serv-
ices, vocational rehabilitation services, and special services for
care of the aged and mentally retarded. Among their many
grant programs, the Department of Housing and Urban Develop-
ment makes grants for urban renewal, the Office of Economic
Opportunity grants to support legal services for the poor, and
the Department of Interior grants to control water pollution.

The enormous significance of the exemption for rulemaking
relating to "grants" from the usual requirements of section 553
can be further appreciated by an examination of the extent of
our national government's grant programs. Grants-in-aid to state
and local governments comprise the overwhelming bulk of fed-

'* Attorney General's Manual, supra note 11, at 27-28.

332 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES

eral grants. In 1970 it is estimated that such grants to state
and local governments will reach $24.7 billion, accounting for
99% of total federal aid received by those entities in that year.
Grants will then account for almost 18% of state and local rev-
enues,"^ and an estimated 24% of federal expenditures on civilian
domestic programs.'"

Functionally speaking, federal grants to state and local gov-
ernments will break down in the following way during the next
fiscal year: agriculture and agricultural resources 4% ; natural re-
sources 3% ; commerce and transportation 22% ; community de-
velopment and housing 11%; education and manpower 18%;
health and welfare 40%; and other 2%. "The cumulative effect
of the tremendous increases in human investment grants in the
1960-70 period will be to place the principal emphasis of federal
aid ... on health and welfare activities — as well as give added
impetus to education and manpower, and community develop-
ment and housing efforts. In 1970, these programs will account
for 69% of total estimated aid payments." The rising tide of
federal grants activities in the areas of human investment can
best be depicted by noting that between 1964 and 1970 annual
federal grants for health and welfare purposes will rise some
$6.3 billion or 168%; for education and manpower purposes by
$3.5 billion or 364%^ ; and for community development and hous-
ing purposes by $2.3 billion or 546%." On the basis of these facts
it is clear that rulemaking relating to "grants" by the national
government has an enormous and vital effect on the daily lives
of tens of millions of Americans.

E. Benefits

As used in section 553(a)(2) the term "benefits" mainly refers
to programs under which the national government makes pay-
ments in money or kind to persons in consideration of previous
contributions paid to, or in some cases services rendered to,
the United States. In a few situations the payments are made
merely because of the individual's status. Cash benefits are usually
paid from government trust funds, and, unlike grant money,
may normally be expended in any way and for any purpose the
recipient desires.

The "benefits" exclusion has a very broad scope and has been
deemed to cover rulemaking relating to a great variety of pro-

" Special Analysis 203.
'« Id. 208.
" Id. 207.

REC. Ifi. APA RULEMAKING EXEMPTIONS 333

g:rams. More specifically, this exemption applies to rulemakinj?
relating to pensions, medical care, and other similar services pro-
vided to veterans by the Veterans' Administration, and to all
rulemaking relating to old age, survivors, disability, and health
insurance payments made under the Social Security Act.'" The
exclusion also covers rulemaking relating to the social insurance
programs administered for employees of railroads by the Rail-
road Retirement Board, the social insurance programs for fed-
eral employees administered by the Civil Service Commission,
and the federal-state unemployment insurance program whose
monies are administered by the Department of Labor. Federal
rulemaking relating to federally financed, state administered,
federal-state assistance programs, such as Aid to Families with
Dependent Children, may also be considered by this exemption
as well as that for "grants."

Federal outlays for cash benefit programs totaled $40 billion
in 1968, an amount equivalent to about five per cent of the Gross
National Product. Cash benefits program expenditures are ex-
pected to reach about $49 billion in 1970. The total amount spent
on cash benefit programs have comprised about one-fourth of
all federal expenditures for all purposes in each year since 1961."''
Cash benefit programs may be categorized roughly into two
groups — one consisting of income replacement benefit programs,
and another of income support programs. Some $42.5 billion in
federal outlays will be made in 1970 for income replacement
benefit programs providing protection against loss of earnings
due to retirement, disability, death of the breadwinner, and un-
employment. Of this amount, about $36.5 billion will be from
accounts funded in part by employer and /or employee contri-
butions to which over fifty million Americans contribute. In
1969, benefits from the above income replacement programs
will be paid to approximately 18 million people.'^" Federal benefit
outlays in the income support programs which base benefits
on current needs will amount to $5.9 billion by 1970, and will
reach almost 12.4 million recipients."^' Aid to Families with De-

''^ See Attorney General's Manual, supra note 11, at 28.

■' Special Analysis 174-75. Some of this money, and some of the money in the following
figures with regard to "benefits," represents grant payments to the states for benefits pro-
grams they will administer. Consequently those funds might better be viewed as "grants"
rather than "benefits," even though they may result in the payment of federally financed
benefits. However, the overwhelming bulk of the money referred to in the accompanying
figures are benefit payments made directly by the United States. See id. 187 (HETW "Public
Assistance" category).

* Id. 175, 179-80 ; Statistical Abstract 476. The survivors and disability programs in this
category will benefit some 7.8 million beneficiaries and 4.9 million beneficiaries respectively ;
and unemployment payments will aid about 5.3 million individuals.

" Special Analysis 182.

334 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES

pendent Children is one of the best known of these programs.

The cash benefit programs are administered by a small group

of governmental units as the following table will show : ^^

TABLE C

Governmental Units Administering the Cash Benefit Programs

Governmental Unit Amount

Department of Health, Education & Welfare $33.3 billion

Veterans' Administration 5.5 billion

Department of Labor 2.9 billion

Department of Defense 2.7 billion

Civil Service Commission 2.4 billion

Railroad Retirement Board 1.6 billion

In addition to all of the above federal benefit programs provid-
ing cash benefits which the recipient is free to use as he chooses,
outlays in federal programs providing benefits in kind will be
in excess of $5 billion by 1970,*'^ and will provide benefits for
many millions of persons.'** It is rulemaking related to these pro-
grams, involving billions of dollars and directly affecting tens of
millions of Americans, that is removed from the mandatory
notice and public participation requirement of section 553 by
the term "benefits" in subsection (a) (2).

F. Contracts

The last section 533(a)(2) exemption to be considered is that
for "public . . . contracts." The main thrust of the "contracts"
exemption seems to be toward government procurement of real
or personal property and services. The legislative history of the
Act does cast some doubt as to whether "rulemaking relating
to public . . . contracts" includes one area, vitally important to
a great many people — that of "minimum wage determinations
of the Department of Labor in connection with public con-
tracts." ^^ However, in light of all the evidence and the unqualified
sweeping language of the exemption those determinations must

^Id. 187.

^Id. 186.

M/d. 185.

^ Objections were made to an early draft version of the APA which exempted "any matter
relating to . . . public property or contracts" on the grounds that the § 4 rulemaking pro-
cedures "should not be applied to minimum wage determinations of the Department of Labor
in connection with public contracts." The reaction to the criticism was to suggest that the
exemption now found in § 553(b) (B) for situations in which the usual procedures are "im-
practicable, unnecessary, or contrary to the public interest," "amply provide[s] for proper
exemptions," rather than to state what otherwise would seem obvious: the term "contracts"
completely and unqualifiedly exempted Department of Labor wage determinations from § 4.
S. Doc. No. 248, supra note 2, at 18.

REC. 16. APA RULEMAKING EXEMPTIONS 335

be deemed within that exclusion."" In this connection it should
be noted that the Attorney General's Manual unequivocally states
that "the exemption extends to wage determinations made by the
Labor Department under the Davis Bacon Act and the Walsh
Healy Act, as conditions to construction and procurement con-
tracts entered into by the Federal Government." "

The "contracts" exemption clearly has a very wide scope. In
addition to General Services Administration rulemaking relat-
ing to contracts for the procurement of land, goods, and services,
and to construction contracts of all kinds, the exemption applies,
as do all of the other (a)(2) exemptions, to rulemaking of that
sort by every federal agency. For instance, it extends to rule-
making by the Treasury Department relating to the terms under
which government securities are issued, owned and redeemed
"since securities are government contracts." ^^ It also extends to
regulation making for Department of Agriculture programs such
as the Cropland Adjustment Program, Feed Grain Program,
Cropland Conversion Program, Soil Bank Program, Wheat Di-
version Program, Crop Insurance Program, and a number of
Commodity Credit Corporation programs. In addition, it applies
to such Health, Education and Welfare contracts as those to
establish or expand law school clinical experience programs, and
those for university research on a huge number of topics. It
also, of course, applies to rulemaking relating to the nondiscrim-
ination in government contracts program administered by the
Department of Labor.

An idea of the significance and importance of such government
contracts, rulemaking relating to which is excluded by section
553(a)(2) from the usual rulemaking requirements, may be
gained from the following illustrative data. The jobs of millions
of Americans are directly and indirectly affected by the contract-
ing activities of the federal government. In fiscal 1969 the United
States will purchase $20.6 billion in nondefense related goods
and services.**'^ Outlays under contracts for direct, nondefense re-
lated federal public works, which include the design and con-
struction of new structures, major improvements and modifica-

** See Attorney General's Manual 28, quoted in text accompanying note 87 infra: Reich,
tupra note 61, at 498. Note also that the continuous practice of the Department has been to
treat such determinations as exempt. 1969 Survey, supra note 27 (response of the Department
of Labor) .

"Attorney General's Manual, supra note 11, at 28 (citations omitted) (citing Perkins v.
Lukens Steel Co., 310 U.S. 113 (1940)).

** 1969 Survey, supra note 27 (response of the Department of the Treasury).

*' U.S. Bureau of the Budget, Budget of the United States Governmeint, Fiscal Year
1969. at 541.

336 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES

tions of existing structures, and in some cases site acquisition,
will reach about $2.5 bill^'on in 1970.^" The total estimated cost
at that time for all nonmilitary federal public works in progress,
which includes the sum of payments to be made under contracts
in process and contracts to be newly initiated, will amount to
$12.5 billion.^i

In 1967, awards were made under defense related procurement
contracts, including contracts to obtain military supplies, services,
or construction of all sorts, amounting to $44.6 billion. ^^ For that
same year, it was estimated that jobs for 7.4 million workers,
comprising about ten per cent of all employees in this country,
was generated by Department of Defense contracts. ^^ It should
also be noted that arrangements for the financing of the public
debt of the United States, which the Treasury treats under the
"contracts" exemption, covered $326 billion in 1967. This in-
cluded $210 billion in marketable public issues.^* Rulemaking
relating to all of the above, affecting the lives of millions of
individuals in every part of this country, is removed by the
"contracts" exemption from the requirements of subsections (b)-
(e).

G. Some Conclusions With Respect to the Scope and Practical
Importance of Section 553(a) (2) Exemptions

Even if they are strictly construed, which they seldom seem
to be in practice, the section 553(a) (2) exemptions are extraor-
dinarily broad and of very great significance. The language of
these exemptions excludes an enormous quantity of rulemaking
from the requirements of section 553. The classes of rulemaking
excluded by it are also of especially great qualitative importance
to certain segments of our society and to the public interest at
large.^^ The rulemaking involved has a great impact on our na-
tional effort to cure the pressing human problems of the last
half of the twentieth century. Most rulemaking excluded from
section 553 by subsection (a)(2) relates to programs, or func-
tions, or techniques for governing, which have an unusually large
impact on the daily lives of tens of millions of Americans. Efforts
to solve our urban crisis, racial problems, poverty problems, en-
vironmental quality difficulties, and human spirit and character

^ Special Analysis 221-22.

"/d. 226.

^ Statistical Abstract 249.

93 /d. 251.

■^Id. 394-95.

9'&i' Bonfield, supra note 31. at 512-20.

REC. 16. APA RULEMAKING EXEMPTIONS 337

maladjustments have mainly been pursued through the use of
"public property, loans, gfrants, benefits, or contracts."

As a result, most rulemaking attempting: to deal with the im-
portant domestic problems facing our nation in this era has been
conducted without any guarantee that public participation of the
kind stipulated by section 553(b) -(e) will be allowed. As pre-
viously noted, the rulemaking procedures actually utilized in the
situations currently exempted by section 553(a)(2) are frequent-
ly much less effective to secure adequate public participation
than those found in section 553(b)-(e). The impact of this situa-
tion on the poor, city people, the farmer, and other separable
segments of our society is particularly detrimental.

The exemptions under consideration here are especially unde-
sirable because they tend to insulate almost all of the rulemaking
of certain specific federal agencies against unwanted public
participation. Agencies whose rulemaking is almost entirely in-
sulated against such mandatory public involvement may, as entire
governmental entities, completely lose touch with the public they
are to serve, and in that situation, the public may lose any day
to day ability to influence the operations of such agencies. Al-
though this does not always occur, it is nevertheless a grave
danger.

Two points deserve reiteration. First, rulemaking of the kind
exempted by subsection (a)(2) intimately affects millions of
Americans in their daily lives, and is one of the most important
and frequently used means by which our national government
seeks to solve our pressing social, economic, and environmental
problems. As the Senate Committee on Administrative Procedure
stated when it recently recommended modification of section
553(a)(2),

[t]he importance of the Government's activity in this area is now enor-
mous, involving, as it does, tens of billions of dollars of expenditures
yearly and vast properties. The rules regulating this activity are conse-
quently of vital concern to the public and it is only reasonable that it be
informed and allowed to take part when rules relating to public prop-
erty, loans, grants, benefits, or contracts are made.""

Second, the exemption of rulemaking relating to "public property,
loans, grants, benefits, or contracts" also creates a special danger
that certain important government agencies may, as entities,
become out of touch with and unresponsive to public needs.
In light of these two points, and the many reasons favoring
required opportunities for public participation in rulemaking that

" S. 518 Hearings, supra note 30, at 379.

338 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES

were discussed in the introduction to this paper, the reasons
assigned to justify these particular exemptions must be examined
with extraordinarily great care.

v. justifications advanced for the "public property, loans,
Grants, Benefits, or Contracts" Exemptions

Arguments advanced to justify the exemption of the so-called
"proprietary" activities of government from usual rulemaking
procedures range in character. Some are purely theoretical and
historical. Others are intensely practical. But they all deserve
careful enumeration and evaluation, for only then can it be as-
certained whether they are adequate to justify the status quo
in light of the competing policies which favor public participa-
tion in rulemaking.

The right-privilege distinction furnishes the most frequent jus-
tification for the exemption of subsection (a) (2) rulemaking
from the procedural requirements of section 553. The theory is
that no member of the public has a "right" to use public property,
receive a loan, grant, or benefit from the government, or to make
a contract with the government. Rather, these are all "privileges,"
and if a man does not like the terms on which these privileges
are made available to him, he can simply refuse to accept the
privileges and thereby avoid submission to their conditions. Con-
sequently, rulemaking relating to these subjects should be treated
differently than rulemaking relating to other government func-
tions. This idea has been expressed in a number of ways.

An official objecting to the legislative imposition of certain
procedures on his agency's activities, including rulemaking of the
sort involved here, stated that "the parties affected [by the
Bureau of Reclamation's activities] . . . voluntarily submit to
regulations in order to gain certain privileges." "' The Depart-
ment of Commerce thought that following the usual procedures
for rulemaking involving the "proprietary functions" appeared
to be "unduly burdensome, particularly where the subject matter
does not involve a right of the private parties concerned, but
rather bestowal upon them of such benefits as loans, grants,
etc." ^^ Somewhat differently stated — so as to include the idea
that a person may avoid complying with subsection (a) (2) rules
promulgated in the isolation of government bureaucracy by not
dealing with the government — is the version supplied by the
General Services Administration a number of years ago :

19il Hearings, supra note 17, at 689 (statement of Commissioner of Reclamation).
' S. 16GS Hearings, supra note 30, at 311.

REC. 16. APA RULEMAKING EXEMPTIONS 339

The rulemaking which is presently subject to section 4 of the Administra-
tive Procedure Act is rulemaking of the true "regulatory" type; i.e., rule-
making that has a direct impact upon industries or the public which have
no choice but to be regulated in the public interest. Such rulemaking af-
fects all members of the public who engage in the regulated activity,
whether they are dealing with the Government or with other members of
the public, while GSA's regulations apply, in general, only to Government
agencies and those members of the public who choose to deal with the
Government by furnishing supplies or services, leasing space, buying
surplus property, etc. Accordingly, since those affected may extricate
themselves of their own volition from the impact of GSA regulations by
not dealing with the Government, due procesp does not require such safe-
guards as are provided in section 4 of the redraft of S. 1663 [which
eliminates the subsection (a) (2) exemptions] for their protection."

The "right-privilege," "avoidable conditions" argument is con-
cerned with the relationship between the subject matter of the
exempted category and the recipient. Another distinction, this
one between the proprietary and nonproprietary functions of
the Government, deals more broadly with th3 nature of the gov-
ernmental activity involved ; yet it is often used in close
conjunction with the "right-privilege" argument to justify the
current subsection (a) (2) exemptions. It is argued that the
procedures contained in section 553 should not be applied to
rulemaking involving the subjects listed in subsection (a) (2)
because when government exercises these functions it is acting
in a "proprietary" capacity. ^°" Consequently, in that situation the
Government should be treated as if it were a business or private
person handling private money or affairs. The floor manager of
the APA in the House argued strongly for this interpretation
during the debate on that bill.^"' Public participation in rule-
making relating to these kinds of situations is deemed to be un-
necessary since if a businessman were carrying on the same
activities, a private person would have no right to participate in
his decision-making process.'"-' Furthermore, it has been asserted
that "freeing functions of a proprietary nature, in order to im-
prove the position of the Government when it is operating in an
area and along lines similar to a business enterprise, reflects the

"Id. 522. See id. at 427.

i"»/rf. 494 (Department of Defense).

'"• S. Doc. No. 248, supra note 2, at 358.

'"-The Department of Defense has stated that "to publish or to admit the public to the
formulation of such a policy [regarding pricing and negotiation of contracts] could only put
the Government at serious disadvantage in the negotiation of the contracts for which the
policy was intended. Certainly there is no comparable disclosure re<iuired of private parties to
Government contracts, and it would be unthinkable for the Government, in its proprietary
capacity, to participate in the formulation of the business policies and practices of the firms
with which it deals." 1957 House Study, supra note 51, at 278. See also S. 518 Hearings, supra
note 30. at 279 (REA).

340 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES

intentional and traditional position of the Congress in this
connection." ^"^

The above arguments should not be sufficient to justify the
current section 553(a) (2) exemptions. In the first place, the law
is currently in the process of reevaluating the "right-privilege,"
"avoidable conditions" distinction as a ground upon which to
base legal judgments regarding the propriety of governmental
action."* The notion that a government agency should be free
to deal with people in any manner the former pleases when
"privileges" are involved — an idea which was never the product
of common sense or sound social policy — is fast disappearing
both in the law, and in the public mind. Secondly, because
many people have come to depend upon such "privileges" as
welfare benefits of various kinds, social security and veterans'
benefits, government guaranteed home loans, federal contracts,
and public recreation facilities, most people now consider them
a part of their entitlement. Furthermore, these people have in-
creasingly little choice but to accept such benefits, whether they
be called "rights" or "privileges." Realistically, the conditions
imposed on recipients of such grants, benefits or public contracts,
for example, frequently cannot be avoided; in the world as
it actually is, most people are in no position to refuse the "privi-
lege" to which the strings are attached.

Finally and most important, both the "right-privilege" and
the "proprietary-nonproprietary" distinctions are meaningless in
this context because they are not tools with which the problem
at hand can be realistically analyzed and evaluated. Rather, they
are screens which enable the user to avoid the hard work of
investigating the real problem involved. To say that public partic-
ipation is not required in rulemaking relating to "public prop-
erty, loans, grants, benefits, or contracts" because they involve
"privileges" or "proprietary" matters is to declare a result with-
out giving any relevant reason for it. The fact that a certain
construction firm has no "right" to contract with the Govern-
ment, or that when the Government enters into such a contract
it is acting in a "proprietary" capacity, or that the firm need
not apply for such a "privilege" if it does not like the rules
governing those contracts, has little to do with answering the
question under examination. Those labels do not help a decision-

^<" 1957 House Study, supra note 51, at 1732 (Federal Housing Administration).

^0* See, e.g.. Reed v. Gardner, 261 F. Supp. 87 (CD. Cal. 1966); O'Neil, Unconstitutional
Conditions: Welfare Benefits With Strings .Attached, 54 Calif. L. Rev. 443 (1966) ; Van
Alystyne, The Defense of the Right Privilege Distinction in Constitutional Law, 81 Harv. L. Rev.
1439 (1968).

REC. 1(5. APA RULEMAKING EXEMPTIONS 341

maker to decide intelligently whether application of section 553
procedures to rulemaking involving "public property, loans,
grants, benefits, or contracts" is in fact undesirable. That con-
clusion can be reached only after a careful examination of the
consequences flov^ing from an application of section 553 pro-
cedures to such cases; and it can be justified only if the specific
advantages of public participation in those cases are outweighed
by the specific disadvantages that would flow from such a re-
quirement.

As previously noted, the sound administration of government
demands fully informed decision-makers. Presumably we intend
all aspects of governmental activity to be administered wisely
including those that can be labeled "proprietary" and those that
involve the dispensing of "privileges." Similarly, our dedication
to responsible democratic government requires that the rule-
making process be responsive to aff'ected citizens by allowing
them to communicate eff'ectively their views to the relevant of-
ficials. Here, too, we presumably want citizens to have a chance
to protect their interests against administrative action prejudi-
cial to them in any way, whether that prejudice stems from
government action involving a "right" or a "privilege," or a "pro-
prietary" or "nonproprietary" matter. If the (a) (2) exemptions
are to persist in the face of such important competing public
policies, it should be because of some particular undesirable con-
sequences that might flow from their elimination and not be-
cause an irrelevant label can be attached to the subjects they
embrace.

Most federal agencies making rules relating to "public prop-
erty, loans, grants, benefits, or contracts" take the position that
the repeal of section 553(a) (2) would somehow harm the per-
formance of their responsibilities. The specific practical justifi-
cations offered to support the exemptions in question vary. They
have been gathered from various sources, including congressional
hearings, a survey prepared for this study,^"' and a related survey

105 "Yhe question asked in this survey was:

From the point of view of your department or agency what disadvantages, if any, do
you see in a statute which would eliminate the general exclusions now found in
subsections 553 (a) ( l)-(2) and thereby make the provisions of subsections 553(b)-(e)
applicable to all rulemaking relating to those currently excepted situations? Be as specific
as possible, furnishing concrete, detailed examples. Overly general answers will not be
particularly helpful. If your answer varies from program to program or from one tJTpe
of currently excepted rulemaking to another, please specify and explain in detail.
Despite the instructions contained in the last three sentences, most agencies responded with
general answers and did not furnish concrete, detailed examples of how the alleged dis-
advantages arise in practice. The failure to present specific instances may be indicative of
the frailty of the many arguments made against modification of § 553(a) (2).

342 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES

done for the Administrative Conference of the United States in
1968.^°«

The most frequently articulated, practical justification for the
subsection (a) (2) exemptions is that their elimination would
cause a greatly increased work load resulting in both delay in
the performance of the Government's everyday functions and
increased costs in carrying on those functions. The spectre of
inefficient delays arises from a sense that the bulkiness of the
rulemaking task could cause the bureaucracy to bog down if
the exemptions were eliminated. The General Services Adminis-
tration has opined, for example, that "[p]ublic participation
[through rulemaking] in the management [of] property and
contracts would be so complicated and cumbersome as to seriously
impede and delay the efficient and economical conduct of the
Government business." '"" Similarly, "delay in rendering services
and administering benefits" was the prediction of the Veterans'
Administration if subsection (a) (2) was eliminated.^"'* The De-
partment of Interior has asked, in this regard :

Is the public really better served through the medium of notice of rule-
making and publication in the Federal Register in every instance of the
formulation of a statement of policy? What effect would such a require-
ment have on the operations of a program agency? Do we want to take
the chance of subjecting much of the informal policy making that we do
today on a daily basis to the potential of interminable delays? Can our
programs afford these delays? Even more importantly, will Congress and
the public tolerate these delays? We firmly believe that the answer to all
of these questions, when carefully analyzed, must be "no"! '""

On the issue of increased operating costs, the Farmers Home
Administration has reported, for example, that elimination of
these exceptions "would cause a tremendous increase in the vol-
ume of work and operating costs" of that agency. ^'^ Even an
agency seemingly unopposed to the modification of this exemp-

106 The auestion asked in 1968 was:

What disadvantages, if any, do you see in a statute which would eliminate the exclusions
now in 5 U.S.C. 553(a) as they may apply to . . . [your programs with a substantial
impact on the poor], and thereby would make the provisions of 5 U.S.C. 553(b)-553 (e)
applicable to all rulemaking relating to those programs? (Assume that the several
exceptions now in sections 553(b) through (e) would remain unchanged.)
Bonfield, supra note 31, at 548.

'"MOS? House Study, supra note 51, at 1579.

>»8 1969 Survey, supra note 27. See also similar comments by the same agency in 1957 House
Study, supra note 51, at 2060 and S. 1663 Hearings, supra note 30, at 463.
"•» S. 518 Hearings, supra note 30, at 42.

""1969 Survey, supra note 27 (response of FHA, Department of Agriculture). See also id.
(responses of Forest Service and Soil Conservation Service, Department of Agriculture;
Atomic Energy Commission (attachment to response) ; Veterans' Administration) ; S. 1663
Hearings, supra note 30, at 144, 427 (Department of Agriculture and General Services Ad-
ministration).

REC. 16. APA RULEMAKING EXEMPTIONS 343

tion has noted that such a change "would, of course, substan-
tially increase the cost of government." ''•

Elimination of the present exemptions is also deemed unde-
sirable because it would cause adherence to the procedures of
section 553(b) -(e) in many cases where the public has little
interest in the rulemaking/^- or is unlikely to make a significant
contribution to it.^'' It is alleged that frequently a rule being
considered in relation to one of the exempted subjects "is so
limited in its application or so minimal in its public impact that
. . . any solicitation of comment from the public would be com-
pletely unjustified." ^^*

Furthermore, if rulemaking relating to "public property, loans,
grants, benefits, or contracts" is subjected to the requirements
of section 553(b) -(e), it is feared that the agencies involved
in such rulemaking, and those members of the public most di-
rectly affected, would be placed in an adversary position, thereby
discouraging mutual cooperation toward finding the best solu-
tion to common problems. The Tennessee Valley Authority has
stated, for example, that their operations would be likely to be
disrupted by such a polarization. ^^^

The agencies also feared that repeal of subsection (a)(2) would
remove desirable flexibility in such rulemaking. The Atomic En-
ergy Commission complained in this regard, as an illustration,
that if that agency's rulemaking relating to contracts had to com-
ply with section 553, it would "lessen the Commission's flexibility
in dealing with the many different kinds of contracting situations
which arise." ^^'^ A similar argument is that elimination of these
exemptions would discourage agencies from making worthwhile

"' Bonfield, supra note 31, at 549 & n.47 (Department of Labor).

"^ See 1957 House Study, supra note 51, at 551 (Department of Interior, Fish and Wildlife
Service) .

'"See S. 1663 Hearings, supra note 30, at 177 G (Department of Treasury) : 1969 Survey,
supra note 27 (response of Small Business Administration).

"*S. 1663 Hearings, supra note 30, at 427 (General Services Administration). On another
occasion a representative of the G.S.A. stated that "public advance notice in the Federal
Register and public participation in the formulation of these rules is too much, costs too
much, takes too much time, for many rules that would not warrant that type of effort."
Transcript of the ABA Symposium on S. 1336, Washington, D.C. (Dec. 1, 1966) 109.

"* TVA said that procedures similar to those in what is now § 553 "would place TVA and
its distributors in an adversary position where the tendency would be for each distributor
to try to gain an advantage in the formulation of the policy rather than working with TVA
and other distributors in a mutual effort to find the best possible solution to each problem as
it arises." S. 1663 Hearings, supra note 30, at 544. The agency gave a similar response in
1968. See Bonfield. supra note 31, at 549 n.49. See also 1957 House Study, supra note 51, at
374 (Office of Education, Department of Health, Education and Welfare).

'"S. 518 Hearings, supra note 30, at 119. See also S. 1663 Hearings, supra note 30, at 544,
stating that "a large measure of the success of T.V.A. . . . attained during the past 31 years
has been due to its ability to maintain flexibility in its operations. The proposed revisior
[elimination of § 553(a)(2)] would take away this flexibility."; 1957 House Study, supra
note 51, at 2060 (Veterans' Administration) : Bonfield, supra note 31, at 548 n.45.

344 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES

changes in rules because of the more formal and particularized
procedures that would be required. The House and Senate Reports
on the APA noted that "[tlhe exception of proprietary matters
[in section 4] is included because the principal considerations in
most such cases relate to mechanics and interpretations of policy,
and it is deemed wise to encourage and facilitate the issuance of
rules [on these excluded subjects] by dispensing with all manda-
tory procedural requirements." "^

Section 553(a)(2) is also said to be justified on the grounds
that without it, there would be uncertainty in some cases whether
public rulemaking procedures must be followed, thus causing
litigation or encouraging the use of those procedures in situations
where they would be unwise. The Department of Defense re-
ported, for example, that the primary disadvantage to that
agency of eliminating the broad exclusions in section 553 was
"uncertainty," because the extent to which their rulemaking fits
under the more limited exemptions found within section 553(b)-
(e) was unclear. This "leads the Department of Defense to fear
a rash of litigation testing . . . [its] interpretation of these
. . . [other exemptions]." "^

The current exemptions are alleged to be necessary for an-
other reason. In some cases, section 553 procedures are said to
be an insufficient means by which to assure that the relevant
people participate adequately in rulemaking relating to the ex-
empted subjects. Requiring adherence to those procedures in
the subsection (a)(2) situations might, therefore, sometimes
force an agency to follow two sets of procedures in order to in-
volve properly the right people. The Office of Economic Op-
portunity has noted, for instance, that the procedures prescribed
in section 553 "would generally prove ineffective in reaching the
poor," and that they would have to be supplemented by other,
more effective procedures currently being used by OEO."**

The diflficulty with all of the previous general justifications for
the current section 553(a)(2) exclusions is that they do not
distinguish rulemaking relating to these exempted categories as
a class from rulemaking already subjected to the requirements
of section 553(b)-(e). Every one of the arguments just outlined
could also be made with respect to those classes of rulemaking
already subjected to the usual rulemaking procedures. The com-

J"S. Doc. No. 248. supra note 2, at 199, 247.

1" 1969 Survey, supra note 27 (response of Department of Defense). See also id. (response
of REA, Department of Agriculture) .

"» Bonfield, supra note 31, at 549 n.48. See also 1969 Survey, supra note 27 (response of the
Office of Economic Opportunity) ; S. 166S Hearings, supra note 30, at 325 (Department of
Health, Education and Welfare).

REC. 16. APA RULEMAKING EXEMPTIONS 345

plaint that increased cost, work load, general delay, duplication,
and the like will result if the currently excepted rulemaking is
required to follow section 553(b)-(e) could, for example, also be
made with respect to the run-of-the-mill regulatory rulemaking
which we have already decided should be subjected to those pro-
visions. The argument that required adherence to usual rule-
making procedures in these cases will reduce needed flexibility,
cause uncertainty and litigation, be a waste in many cases, and
discourage needed changes in rules, could also undoubtedly be
used to support the exemption of all the currently included rule-
making. If it was worth risking some of these possible conse-
quences to bring that rulemaking within the procedures con-
tained in the statute, it is also worth risking them to bring
the rulemaking under discussion here within those requirements.
There is no evidence to support the general assertion that the
deleterious consequences flowing from the inclusion of subsection
(a)(2) rulemaking within the provisions of section 553 are
greater than the similar consequences resulting from the ap-
plication of that provision to the rulemaking already subject to
its terms. Furthermore, experience with the section 553 proce-
dures as applied to other kinds of rulemaking also suggests that
these consequences are not likely to be as frequent, great, or detri-
mental in the mass of subsection (a)(2) situations as advocates
of this exemption claim.

However, agencies do encounter specific situations involving
subsection (a)(2) rulemaking in which a requirement that they
provide advance notice and an opportunity to participate would
be unreasonable. For instance, although the Department of Labor
does not argue that there are any disadvantages in the elimina-
tion of section 553(a)(2) as it applies to rulemaking of general
application, it takes a different view with respect to certain rule-
making situations of particular application.

[T]he Davis-Bacon Act and some 45 related acts for Federal and Fed-
erally-assisted construction contracts . . . provide that the specifications
for all such contracts shall require the contractor to pay to his laborers
and mechanics at least the prevailing wage as determined by the Sec-
retary of Labor. The determinations are made by the Secretary at the
request of the contracting agency before the bids are let.

. . . [The vast sums spent on Federal and Federally-assisted con-
struction] are influenced not only by the level of the wages, but also by
procedures which delay commencement of the contract. The aphorism
that time means money is particularly pertinent here.

. . . [A]t present the Department of Labor issues almost 26,000 pre-
vailing wage determinations annually, averaging about 25 separate
classifications of laborers and mechanics. Each classification may in-

346 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES

elude up to six separate findings as to cash wages and fringe benefits pay-
ments. The Department receives about 45,000 pieces of correspondence
annually in connection with the issuance of these wage determinations
[which constitute rulemaking within the definition of § 551 (4)].

Application of the formal rule-making requirements of section 4
would require some 500 to 600 notices of proposed rulemaking to be pub-
lished each week in the Federal Register. Interested persons would have
an opportunity ... [to participate in each case]. The processing of the
submitted data, views, and arguments could result in obvious delays
and additional personnel and other costs.""

On this basis the Department of Labor has concluded that
"there are considerable disadvantages and no corresponding- ad-
vantages in the elimination of the exemptions in section 553(a)
(l)-('2) as thev apply to wage determinations under the Davis-
Bacon Act and its related acts and the Service Contract Act." ^^i
In this situation, it is clear that the unusually large costs which
would be imposed on the Government by required adherence to
normal rulemaking procedures far outweigh the benefits of public
participation. These costs include not only the direct monetary
cost of administering such procedures in this unusual situation
but also the likelihood of substantial, deleterious consequences to
the Government's construction program. Arguments based on
the sheer magnitude of rulemaking necessary in a particular sit-
uation have also been made by a number of other agencies/^^

"• S. 518 Hearings, supra note 30, at 239-40. See also 1969 Survey, supra note 27 (response
of the Department of Labor.) The following additional reasons are offered for exempting wage
determinations from § 553 rulemaking procedures:

1. Prospective bidders and interested labor organizations receive actual notice either
by means of direct distribution by this Department, distribution by a parent organization,
or examination of the advertisement for bids. The constructive notice which would be
given by means of the Federal Register is not necessary.

2. Since the wage determination process is in essence a continuing one, interested
persons have an open-ended opportunity to submit written data, views, or arguments
about prevailing wage practices in a locality. An opportunity to submit such information
in the case of any one determination therefore becomes almost meaningless.

3. The issued wage determination is, in effect, tentative until there is no longer a
reasonable opportunity to notify bidders of substantive changes in its terms. Under
these circumstances, a separate notice of rulemaking is meaningless.

4. There is no need for any delay in effective date of the wage determination. The
purpose of a delay in effective date is to permit persons affected thereby to adjust to
its terms. The bid submitted by a contractor repesents such an adjustment :

S. 518 Hearings, supra note 30, at 241.

"* 1969 Survey, supra note 27.

"^ The 1969 survey response of the Department of Agriculture's Forest Service indicates that
compliance with §§ 553(b)-(e) would retiuire it to publish in the Federal Register "70 percent
of the Forest Service Manual and Handbook, presently consisting of approximately 30,000 pages
with changes averaging 5,800 annually." An attachment to the 1969 Survey response of the
Atomic Energy Commission indicates that "at present, A. E.G. Procurement Regulations consist
of approximately 860 pages and retiuire modification about 40 times a year. Other A. E.G. man-
uals and handbooks relating to contracts and property consist of approximately 1,000 pages
and are supplemented and revised about 50 times a year." See also S. 518 Hearings, supra
note 30, at 70 (Department of Defense). It should be noted, however, that much of the above
would be excluded from the usual rulemaking requirements of § 553 because they are "inter-

REC. 16. APA RULEMAKING EXEMPTIONS 347

but few of them are as convincing or as extraordinary as that
noted above.

Similarly, there is no doubt that repeal of the (a)(2) exemp-
tions must not interfere with the ability of agencies to react
quickly in emergency situations, or in other situations where the
proper performance of their functions requires rapid action. For
example, there are many situations in which the Department of
Agriculture cannot give advance notice of, or allow prior public
participation in, its rulemaking relating to the wheat acreage
allotment or crop insurance programs. The Department must
frequently make changes in the regulations relating to those
programs on an emergency basis, "because of a flood, other un-
usual weather, plant disease or something similar. In such cases
[it needs] to change the regulation and make it effective at once
without giving notice or delaying the effective date." '^^ Similarly,
agencies like the Department of Treasury and the Federal Re-
serve Board cannot perform their intended functions properly
unless they can respond instantaneously, when necessary, to a
changed economic situation by promulgating rules "related to
the implementation of effective monetary or fiscal policy." ^^*
Rules imposing immediately needed safety requirements furnish
another example.

There are also specific occasions involving subsection (a)(2)
rulemaking in which advance public procedures of the type listed
in section 553 may cause the very evil that the proposed rules
are designed to avoid. This is so, for example, in the situations
just referred to relating to the implementation of an effective
monetary or fiscal policy. Advance notice in such cases may un-
settle the money and credit markets, present opportunities for
deleterious speculative activities, and "could have generally dis-
ruptive effects on financial markets and financial institutions." ^"
Another case involving an exempted subject in which adherence
to usual rulemaking procedures would have caused the very evil
the contemplated rule sought to avoid occurred in 1960 when the
Secretary of the Interior declared a moratorium on the accept-
ance of applications with respect to the public lands. The reason
for the moratorium was that a very large backlog of such ap-
plications had accumulated while many new ones were continu-
ously being filed. The Department pointed out that requiring

pretative rules" or "general statements of policy" as opposed to "substantive rules" or
"legislative rules." See 5 U.S.C. §§ 553(b) (A), (d)(2) (Supp. IV, 1969).

"'1969 Survey, supra note 27 (response of Production Stabilization Division, Department
of Agriculture) .

^* S. 518 Hearings, supra note 30, at 51, 64-65, 395. 398, 400.

"' Id. 395, 398, 400.

348 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES

"publication in the Federal Register of a proposed moratorium
would have invited a deluge of applications," making the situation
much worse than it already was.^-*'

In addition to the above, there is another class of situations
involving subsection (a)(2) rulemaking in which adherence to
the usual procedures involving advance notice and an opportunity
to participate may be deemed unreasonable. A situation occasion-
ally arises in which the rulemaking in question is so insignificant
or minor in nature and impact that utilization of these proce-
dures may be a complete and predictable waste. A rule requiring
persons receiving federal loans or grants to sign the loan or grant
instrument in ink or ball point rather than in pencil or crayon
surely does not require public participation — nor, of course, do
purely technical amendments to an existing rule. Similarly, if all
of the information relating to the form and desirability of a given
rule is necessarily within the exclusive possession of the national
government because, for example, that information is a military
secret or otherwise privileged from disclosure, advance notice
and an opportunity to participate would be useless and a pre-
dictable waste.

The above discussion demonstrates that in certain types of
cases involving rulemaking relating to "public property, loans,
grants, benefits, or contracts," adherence to usual rulemaking
procedures would be unreasonable. There are specific situations
where the policies favoring public participation in rulemaking
are outweighed by the conflicting need to operate the Government
efficiently, expeditiously, effectively, and inexpensively. These sit-
uations, however, are a minority and break down into a number
of well-defined classes which can be dealt with individually. They
do not, therefore, constitute adequate justifications for the ex-
emption of all rulemaking activity relating to the excepted sub-
jects; rather, they only suggest that suitable, narrowly-drawn
exceptions be provided for these atypical cases and situations. ^-^

Finally, an interesting special argument has been made to
justify the "contracts" exception. It has been argued that the
"contracts" exemption should be retained in the current form
because :

^^Id. 43.

'2' This was recognized, for example, in the 1969 Survey response of the Department of
Agriculture's Production Stabilization Division. The response stated that the Division would
be disadvantaged if § 553(a) (2) was eliminated because that action might make it difficult to
deal with emergency situations. But the response went on to note: "It is true, of course, that
notice and effective dates can be waived for cause, but an exemption, we feel, would be prefer-
able to waivers."

REC. Ifi. APA RULEMAKING EXEMPTIONS 349

[I]t is more appropriate to make procedural improvements in this highly
specialized field by amendments to title 41 [which deals in detail with
public contracts]. The great advantage of the Administrative Procedure
Act is that it can cut across a lot of statutes and give general rules for
a lot of agencies where you could never catch up if you were dealing with
every agency directly. But where you have one title that already sets
forth very specialized procedures, if those are not proving adequate,
then it seems to us that the way to correct them is to amend that title.'"

This argument flies in the face of the intended function of the
APA which is to achieve as much uniformity in federal admin-
istrative procedure as is reasonably possible through the use of a
single comprehensive code on that subject.^--' If it is reasonably
possible to obtain such uniformity with respect to the procedural
requirements relating to most rulemaking, including that re-
lating to contracts, an effort should be made to do so by amending
the APA.

Moreover, the above special argument supporting the "con-
tracts" exemption may be used merely to defer action which
would modify the present procedures utilized in rulemaking re-
lating to public contracts. In fact, it is probably not of great
consequence whether rulemaking relating to contracts is sub-
jected to the requirements of section 553(b)-(e) directly, or in-
directly by adding those same provisions to title 41. But the
implicit suggestion in the above special argument for a section
553 contracts exemption is that contracts rulemaking should not
be subjected to the exact same kind of requirements as section
553(b)-(e) imposes. That is really why the subsection (a)(2)
exemption for contracts should be retained, and any modifications
of rulemaking procedure in such cases be worked, if at all, under
title 41.

However, the evidence uncovered in this study does not support
the need for a blanket and unqualified exemption from section
553 for all rulemaking relating to public contracts, or, for that
matter, for all rulemaking relating to any of the other subjects
listed in section 553(a)(2). As subsequent discussion will dem-
onstrate, a more narrowly tailored exemption can be devised to
deal with the exceptional cases of section 553(a)(2) rulemaking
that need special treatment. Consequently, no persuasive reason
appears to justify a continuation of the present unqualified and
across-the-board exemption for rulemaking relating to "public
property, loans, grants, benefits, or contracts."

"' S. 518 Hearings, supra note 30, at 334.
"' See sources cited note 40 supra.

350 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES

VI. Previous Proposals to Modify Section 553(a) (2)

In almost every session of Congress during this decade one or
more bills have been introduced to reform federal administrative
procedure. The most important bills attempting this were S. 2335,
S. 1663, and S. 1663 (subcommittee revision) of the Eighty-
eighth Congress, and S. 518, S. 2770, and S. 2771 of the Ninetieth
Congress. All of these bills have one thing in common concerning
the present exceptive language of section 553(a)(2); they elim-
inated the unqualified exclusion from section 553 for rulemaking
relating to "public property, loans, grants, benefits, or contracts."
In its place, they substituted varying kinds of specific and gen-
eral exemptions to deal with the problems that might arise from
that action.

Before outlining the ways in which these various proposals
have sought to resolve the problem under consideration, an intro-
ductory caveat should be stated. In their general definitional
section, every one of the above bills defined "rule" as "the whole
or any part of any agency statement of general applicability
and future effect designed to implement, interpret or prescribe
law or policy. . . ." • ■" The words "or particular" which appear
after the word "general" in the current section 551 definition of
"rule" were purposefully deleted. Rulemaking of "particular ap-
plicability" was treated by these statutes as adjudication and, as
such, was governed by those provisions of the various acts."^
This difference between the presently effective usage of the term
"rule," and the more restricted version just described, makes
comparisons between the present statute and these proposals
somewhat awkward and misleading. That fact should be kept in
mind during the following discussion.

The bill sponsored by the American Bar Association, desig-
nated as S. 2335,^^- inserted a qualified exemption in place of the
presently unqualified one for rulemaking relating to subsection
(a)(2) functions. It stated that "notice of or public participation
in rulemaking" would not be required with respect to rulemaking
"relating to public property, loans, grants, benefits, or contracts
to the extent that the agency finds and publishes, with a statement
of supporting reasons, that such public participation would oc-
casion delay or expense disproportionate to the public interest." ^^^

"«S. 2771. 90th Cong., 1st Sess. § 551(4) (1967) ; S. 2770, 90th Cong., 1st Sess. § 551(5)
(1967) ; S. 518, 90th Cong., 1st Sess. § 2(c) (1967) ; S. 2335, 88th Cong., § 1001(c) (1964) ;
Revised S. 1663, 88th Cong., 2d Sess. § 2(c) (1964) ; S. 1663 88th Cong., 1st Sess. § 2(c) (1963).

"^ See. e.g., S. Rep. No. 1234, 89th Cong., 2d Sess. 8-9 (1966). This report accompanied
S. 1336 which was virtually the same as S. 518, 90th Cong., 1st Sess. (1967).

"2 88th Cong., 2d Sess. (1964). See S. 1663 Hearings, supra note 30, at 32.

"'S. 2335, 88th Cong., 2d Sess. § 1003(f) (2) (1964).

REC. 16. APA RULEMAKING EXEMPTIONS 351

Where an agency could not make such a finding, it could still
utilize a generally applicable exemptive provision to adopt tem-
porary rules relating to those subjects without giving any prior
notice or chance for public participation. That provision applied
"where an agency finds that (1) immediate adoption of the rule
is imperatively necessary for the preservation of the public health,
safety, or welfare, or (2) compliance with the requirements of
this section would be contrary to the public interest." These
findings, and a statement of the reasons for them, had to be
published with the rule, which could not be valid for more than
six months unless it was extended in compliance with the usual
notice and opportunity to participate requirements of section
553.'" And finally, in no case did the ABA bill remove the right
of interested persons to petition for the issuance, amendment, or
repeal of a rule, and the agencies' obligations in respect thereto.

S. 1663''' substituted for the present section 553(a)(2) ex-
emptions a slightly different kind of qualified provision than that
used by the ABA bill. In those cases where "notice and public
participation would be unwarranted or contrary to the public
interest," rulemaking relating to "public property, loans, grants,
benefits, or contracts" was specifically excluded from every pro-
vision of section 553, including the right to petition. ^^""^ There was
no requirement that the agency publish such a finding or the
reasons for it with the rule so issued. Rulemaking relating to the
subjects under consideration here could also be excluded from
the notice and opportunity to participate provisions of section
553 under a generally applicable emergency exclusionary pro-
vision if the public interest demanded it. The bill stated that in
any case where an agency finds, and publishes the finding and
the reasons for it with the rule issued, "that adoption of the rule
without notice is necessary in the public interest," it may do so.
However, in such situations the emergency rule could not be ef-
fective for more than six months, and could be renewed only
by commencement of a rulemaking proceeding following usual
procedures.^*'

The Senate Subcommittee on Administrative Practice and Pro-
cedure brought out a revised version of S. 1663 ^^^ which com-
pletely abandoned the specific qualified exemption for "public
property, loans, grants, benefits, or contracts" found in the

"*Id. § 1003(d).

■"88th Cong., 1st Sess. (1963). See S. 1663 Hearings, supra note 30, at 21.

"«S. 1663, 88th Cong., 1st Sess. § 4 (1963).

"'Id. § 4(b).

"sgSth Cong., 2d Sess. (1964. See 1663 Hearings, supra note 30, at 1.

352 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES

original version of the bill. Revised S. 1663 contained no exception
of any kind for rulemaking relating to these subjects as such.
The modified bill did, however, continue in almost identical terms,
and under almost the exact same limits as the original, the gen-
eral emergency exemption from the notice and public participa-
tion provisions for all rulemaking that needed such treatment
because it was "necessary in the public interest." The revision
also added an additional general exemption to the notice pro-
vision for "minor revisions and refinements of rules." "^

The rulemaking section of S. 518 of the Ninetieth Congress ^*°
was almost identical to the rulemaking section of S. 1336 of the
Eighty-ninth Congress, which passed the Senate in 1966."^ In
neither bill did the rulemaking section mention "public property,
loans, grants, benefits, or contracts" as such. This meant that
rulemaking involving those subjects was governed by the proce-
dures usually required, unless in some particular case it came
within one of the express general exclusions added to section 553
in place of the section 553(a)(2) exclusions which had been
deleted. The newly added exclusions in S. 518 exempted from
every provision of the rulemaking section, including the right to
petition subsection, "minor exceptions from, revisions of, or re-
finements of, rules which do not affect protected substantive
rights," and "rulemaking that relates solely to the establishment
or revision of monetary rates or policy." "- Additionally, S. 518
continued in very similar form the generally applicable emer-
gency rules exemption found in both S. 1663 and revised S. 1663.^*^

As a result of hearings held on S. 518 two modifications of that
bill were proposed. The first of these was S. 2770,'** which was
similar to S. 518 in every respect relevant to the discussion here,
except that it added an additional exemption to help compensate
for the elimination of the subsection (a) (2) exclusions under
consideration. The added exemption relieved "rulemaking that
relates solely to . . . wage determinations" ^*-' from every pro-
vision of the rulemaking section, including the right to petition
subsection.

139 Revised S. 1663, 88th Cong., 2d Sess. § 4(b) (1964). A permanent exemption, not relevant
to this discussion, was also provided for rules relating to foreign affairs and national defense
or to internal management or personnel of an agency. Id. § 4.

"ogoth Cong., 1st Sess. (1967). See S. 518 Hearings, supra note 30, at 2.

"'S. 1336, 89th Cong., 2d Sess. (1966) See S. 518 Hearings, supra note 30, at 1. The only
relevant difference in the rulemaking that relates solely to the establishment or revision of
monetary rates or policy" [§4(h)(6)] to the other exemptions from §4 already contained
in S. 1336.

i« S. 518, 90th Cong., 1st Session §4(h) (1967).

i"/d. § 4(d).

>"90th Cong., 1st Sess. (1967).

"5S. 2770, 90th Cong., 1st Sess. § 553 (h) (6) (B) (1967).

REC. l(i. APA RULEMAKING EXEMPTIONS 353

The second modification of S. 518 introduced a number of
sharp changes from the original. S. 2771 '"• contained all of the
exemptions found in S. 518 discussed previously except that re-
lating to minor exceptions or revisions. In addition, it completely
and unqualifiedly excluded from every part of the rulemaking
section "rulemaking that relates to public contracts." "^ In so
doing, it treated "contracts" difi'erently than "public property,
loans, grants [and] benefits," which were nowhere referred to
in the Act as such. This bill also contained two generally ap-
plicable exemptions not present in S. 518. It completely excluded
from every requirement of section 553, including the right to
petition, "rulemaking that relates solely to the establishment or
revision of monetary rates, monetary policy, or other matters,
with respect to which notice of proposed rulemaking would seri-
ously impair the effectiveness of the rule." ^*^ It also exempted
from every requirement of section 553 "situations in which the
agency finds (and incorporates in the finding a brief statement
of the reasons therefor in the rules issued) that notice and public
procedures thereon are impracticable, unnecessary, or contrary
to the public interest." ^'-^

Prior discussion presents only the general outlines of the most
important previous efforts to alter section 553(a)(2). It demon-
strates that much consideration has been given to the elimination
or modification of these exemptions and that there is substantial
agreement that some change with respect to the subsection (a)
(2) exclusions is necessary. Most of the above proposals, however,
do not present as desirable a solution for the problem at hand
as that to be discussed in the next section. There are not narrowly
enough tailored to secure the best accommodation of the com-
peting interests involved. Almost all of the prior bills seek to
deal with problems arising from the repeal of subsection (a)(2)
through the use of new exemptive language, most of which is not
demonstrably superior to existing language of section 553 that
could be used as eflficiently for the same purpose. Consider the
following illustrations.

As noted earlier, the continued exclusion of all rulemaking re-
lating to contracts, which is a feature of S. 2771, seems un-
warranted. Similarly, the express exclusions for "all rulemaking
that relates solely to the establishment or revision of monetary

'*«90th Cong., 1st Sess. (1967)

"'S. 2771. 90th Cong., 1st Sess. § 553(h) (5) (1967).

"^ Id. § 553(h)(6). The language commencing with "or other matters" is not present
in S. 518.

"»/d. § 553(h) (4).

354 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES

rates or policy" as found in S. 518 and S. 2771 may also be over-
broad as a rational accommodation of the interests involved.
Some rulemaking within this definition might not need to be
excluded from the ordinary rulemaking procedures of section 553.
For instance, setting the discount rate for banks needs to be
done w^ithout prior public notice. But a proposed rule limiting
the rate of interest that may be paid by member banks of the
Federal Reserve System on time or savings deposits to no more
than "the applicable maximum rate authorized by law to be paid
upon such deposits bv State banks or trust companies organized
under the laws of the State in which such member bank is lo-
cated," "° may not need to be exempted from usual rulemaking
requirements — even though such a rule may "relate solely to the
establishment or revision of monetary rates or policy." The ex-
emption for rulemaking that "relates solely to . . . wage deter-
minations" found in S. 2770 may also be overbroad. It not only
exempts such rulemaking in an unusual situation like that faced
by the Department of Labor, but in all situations, regardless of
the particular circumstances of the case. Moreover, it not only
exempts the wage determinations themselves, but also all rule-
making that "relates solely to" those determinations.

New exemptive language whose function can as easily and ef-
ficiently be performed by existing section 553 exclusionary ter-
minology is also plentiful in the above bills. It was inserted to cure
the problems resulting from their elimination of present sub-
section (a)(2). For example, S. 2335 exempts rulemaking where
"such public participation would occasion delay or expense dis-
proportionate to the public interest;" S. 1663 exempts rulemaking
from usual procedures when they are "unwarranted or contrary
to the public interest;" revised S. 1663 exempts all "minor re-
visions and refinements of rules;" S. 518 enlarges that to an ex-
emption for all "minor revisions and refinements of rules which
do not affect substantive rights;" and S. 2771 exempts from usual
requirements "matters with respect to which notice of proposed
rulemaking would seriously impair effectiveness of a rule." Sub-
sequent discussion should demonstrate that the problems sought
to be solved by inserting the above new language as a substitute
for the subsection (a)(2) exclusions can easily, and perhaps more
satisfactorily, be cured by other exemptive terminology already
contained in section 553.

>«»12 C.F.R. § 217.3(c)(2) (1969). See also. e.g.. id. § 217.2 (prohibiting the payment of
interest on demand deposits and defininR interest for these purposes).

REC. 16. APA RULEMAKING EXEMPTIONS 355

VII. A Solution: Section 553(b) (B) and Section 553(d)(3)

According- to section 553(b) (B) the provisions of section
553(b)-(c) are inapplicable "when the agency for good cause
finds (and incorporates the finding and a brief statement of
reasons therefor in the rules issued) that notice and public pro-
cedure thereon are impracticable, unnecessary, or contrary to the
public interest." This qualified and limited exemption from two
subsections of section 553 deserves careful examination because
it may be a satisfactory substitute for the overbroad, unqualified
exemptions presently contained in subsection (a) (2).

The exemption found in section 553(b) (B) is narrowly tailored
because it requires an administrative assessment of the partic-
ular facts and circumstances surrounding each case of rulemaking
to which it is sought to be applied. The reports of the Senate
and House committees responsible for the APA clearly stated
that

[t]he exemption of situations of emergency or necessity is not an "escape
clause" in the sense that any agency has discretion to disregard its terms
or the facts. A true and supported or supportable finding of necessity or
emergency must be made and published."'

By this, committees intended to establish a restrictive meaning
of the terms "when the agency for good cause finds" which pre-
cede the enumeration of grounds upon which this particular ex-
emption is available.

Therefore, the agencies are required under this provision to
make specific findings, meeting what has been interpreted to be
a strict standard, before they can avail themselves of the ex-
emption. Some commentators have argued that the courts should
not examine the accuracy of the required administrative finding
when the validity of an agency's use of this exemption arises in
litigation.^'- However, this finding is judicially reviewable on the
same basis as any other finding committed to an agency's judg-
ment.!'^ Thus, if the finding is "arbitrary, capricious, an abuse of
discretion or otherwise not in accordance with law" or is "un-
supported by substantial evidence" based on the whole record, it
will be set aside and the rule promulgated rendered invalid. !=■•

"' S. Doc. No. 248, supra note 2, at 200, 2nS. See also id. 358 (remarks of Rep. Walter).

'"See R. Parker, Administrative Law 182-83 (1952) ; Nathanson, Some Comments on the
Administrative Procedure Act. 41 III. L. Rev. 368, 384-85 (1946).

'"See Texaco. Inc. v. FPC, 412 F.2d 740 (3d Cir. 1969) ; Durkin v. Wagner Co., 115 F. Supp.
118 ( E.D.N. Y. 1953) aff'd per curiam sub nom. Mitchell v. Wagner Co., 217 F.2d 303 (2d
Cir. 1954), cert, denied, 348 U.S. 964 (1955). See also National Motor Freight Traffic Ass'n.
Inc. V. United States, 268 F. Supp. 90 (D.D.C. 1967). In this last case, it is not clear
whether § 553(b) (B) or § 553(B) (A) was involved.

'^5 U.S.C. §§ 706(2) (A), (2) (E) (Supp. IV, 1969). See aUo cases cited note 153 supra.

356 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES

Of course, in such cases the presumption of validity will rest, as
it always does, with the administrative action, the burden of
overturning it resting upon the assailant.

There is one interpretation of section 553(b) (B) which should
be rejected at the outset. It can be argued that an agency seeking
to come within the section 553(b) (B) exemption must find that
it is "impracticable, unnecessary, or contrary to the public in-
terest" for the agency to follow the procedures of subsection (b)
in each separate rulemaking case to which it seeks to apply the
exemption, and that it cannot make that finding wholesale as
to any narrowly tailored class or group of rulemaking situations.
This interpretation relies upon certain somewhat ambiguous lan-
guage in the provision : "whe7i the agency for good cause finds
(and incorporates the finding and a brief statement of reasons
therefor in the rules issued)." It also relies upon the supposed
intention of Congress to provide a means by which individual
cases could be separately considered on their own merits, and
an exemption granted only in those specific cases in which it was
justified on one of the grounds stated.

While the above argument has great merit and is a sound gen-
eral rule by which to construe section 553(b) (B), it overlooks
two points. First, it may be "impracticable, unnecessary, or con-
trary to the public interest" to follow usual section 553 procedures
in every single instance of a specific type of rulemaking under a
particular statute, when each such instance is viewed in isolation.
In those circumstances it seems a foolish waste to require re-
petitive and redundant findings and full publication of those
findings. As will be explained later, rulemaking setting the dis-
count rate for the Federal Reserve System is an example of that
kind of situation. ^'"^

Second, there are also situations where compliance with the
procedures of section 553(b) -(c) is not "impracticable" or "con-
trary to the public interest" as applied to any single instance
of rulemaking on a given subject, but becomes so as to a whole
class if those requirements must be followed for all such similar
instances of rulemaking. For example, so many different rules of
a particular type may have to be issued within a short time
period that affording notice and an opportunity to participate in
every such case would be practically impossible, would frustrate
the proper performance of the agency's functions, or would cause
other substantial deleterious consequences. The wage determina-
tions made by the Department of Labor under the Davis-Bacon

^'' See text accompanying note 185 infra.

REC. 1(). APA RULEMAKING EXEMPTIONS 357

and related acts provide an example of such a situation. Pro-
cedures of the type specified in section 553 may not be "impracti-
cable" or "contrary to the public interest" with respect to any
one such determination viewed in isolation; but those procedures
undoubtedly become so when they must be applied to all such
determinations.

As a result, the exemption contained in section 553(b) (B)
should be read to allow an agency to make the requisite finding
for a whole class of rulemaking. But this should only be per-
mitted if the agency can either make that finding as to every
single member of the class considered separately, or as to every
single member of the class because it would be "impracticable"
or "contrary to the public interest" to impose section 553 pro-
cedures on all members. Of course, agencies must be required
to draw their classes for this purpose as narrowly as possible in
order to exclude no more under this exception than is absolutely
justifiable in terms of the statutory criteria. Overbreadth of any
kind in the drawing of such a class of rules should not be toler-
ated. Consideration might also be given to shifting the burden of
proof to the agency with respect to such group as opposed to
individual case delineations, thus forcing the agency to justify
its definition of a "class" of rulemaking sought to be excluded
from usual procedures. Such a limitation, however, may not be
necessary and may have some undesirable consequences.

The grounds specified in section 553(b) (B) upon which an
agency may dispense with the usual rulemaking procedures are
stated in the alternative, so that any one of the three grounds
listed is sufficient to invoke the exemption. ^^^ The first ground upon
which the qualified exemption becomes available is when the
notice and participation requirements of section 553 are found to
be "impracticable." Webster defines the term as meaning, among
other things, "infeasible," "impractical, unwise, imprudent." ""
Earlier drafts of the APA would have made the exemption
available when the public rulemaking procedures were "imprac-
ticable because of unavoidable lack of time or other emer-
gency," ^''^ but the qualifying language after "impracticable" was
subsequently dropped. The Senate and House reports on the APA
stated that "impracticable" means a situation "in which the due
and required execution of the agency functions would be un-

1^ Attorney Genekal's Manual, supra note 11, at 30.

'''Webster's New International Dictionary 1136 (3rd ed. 1966).

'^' S. Doc. 248, supra note 2, at 140, 148, 157. See also id. 181. The version at 181 reads,
"impracticable because of unavoidable lack of time or other emergency affecting public safety
or health."

358 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES

avoidably prevented by its undertaking public rulemaking pro-
ceedings." ^-'^

The term "unnecessary," which is the second exemptive ground
specified in section 553(b) (B), connotes something which is "not
necessary : useless, needless." ^''^ The legislative history indicates
that it must be unnecessary "so far as the public is concerned,
as would be the case if a minor or merely technical amendment
in which the public is not particularly interested were involved." ^^^
On this basis one court seems to have concluded that "unneces-
sary" applies to situations in which an agency rule is "minor or
emergency in character," ^'^- or " 'a routine determination,' 'in-
significant in nature and impact,' and unimportant 'to the in-
dustry and to the public' " ^'^^

Rulemaking is also exempted by section 553 (b(B) from ad-
vance notice and public participation when adherence to those
procedures would be "contrary to the public interest." According
to the APA's legislative history, this phrase "supplements the
terms 'impracticable' or 'unnecessary' ; it requires that public
rulemaking procedures shall not prevent an agency from operat-
ing and that, on the other hand, lack of public interest in rule-
making warrants an agency to dispense with public procedure." ^^*
The Attorney General's Manual takes the position that " 'public
interest' connotes a situation in which the interest of the public
would be defeated by any requirement of advance notice." ^''^

At some point during their legislative history all three terms —
"impracticable," "unnecessary," and "contrary to the public in-
terest" — were referred to as operating "only where facts and
interests are such that notice and proceedings are impossible or
manifestly unnecessary" ^"•^ and as exempting "situations of emer-
gency or necessity." ^'"■' However, the weight of their legislative
history, as well as their language, clearly establishes that these
terms were not meant to be so narrowly limited. At the same
time it must be remembered that these are qualified grounds
for exemption and are not to be construed more broadly than
the demands of sound government administration and wise public

'^' /d. 200, 258. Accord, Attorney General's Manual, supra note 11, at 30.

'«» Webster's New International Dictionary 2504 (3rd ed. 1966).

''* S. Doc. No. 248, supra note 2, at 200, 258. See also Attorney General's Manual, supra
note 11, at 31.

"2 Texaco, Inc. v. FPC, 412 F.2d 740, 743 (3d Cir. 1969).

"'/d. at 743 (citing National Motor Freight Traffic Ass'n v. United States, 268 F. Supp. 90,
95-96 (D.D.C. 1967).

1" S. Doc. No. 248, supra note 2, at 200, 258.

165 Attorney General's Manual, supra note 11, at 31.

>«« S. Doc. No. 248, supra note 2. at 358.

"'M 200, 258.

REC. 16. APA RULEMAKING EXEMPTIONS 359

policy require. It is worth repeating that the section 553(b) (B)
exemption is "not an 'escape' clause in the sense that an agency-
has discretion to disregard its terms or its facts." '""' An agency
can use this exemption only if it has "good cause" within the
provisions of the Act.

A more detailed description of how the section 553(b) (B)
exemption might operate in practice will demonstrate that it
could satisfactorily handle the problems resulting from a repeal
of section 553(a)(2) — and do so on the basis of a rational
accommodation between the need for public participation in rule-
making on the one hand, and the need for efficient, effective,
expeditious, and inexpensive government administration on the
other. Although the terms "impracticable," "unnecessary," and
"contrary to the public interest" overlap to some extent, an effort
will be made, insofar as possible, to examine their applications
separately. But it should be remembered that in light of the
very close relationship between these terms, the following analy-
sis of their applications should also be considered as partially
overlapping.

Consider the exemption for situations where public procedures
are found to be "unnecessary." This could undoubtedly perform
the function intended by the exception for "minor revisions and
refinements of rules" found in several of the bills discussed earli-
er, and probably more satisfactorily so because the existing term
may be more narrowly tailored. For example, the "unnecessary"
exemption seems to cover situations where a rule involved is in
fact of such a minor nature, like the rule requiring government
loan instruments to be signed in ink, that public procedures
would be a predictable and indisputable waste. Also under this
"unnecessary" exemption, public procedures may be dispensed
with for rules announcing the exact penalty rates applicable to
the marketing of certain commodities in excess of the farm-
marketing quota. The Department of Agriculture's action in
those cases only involves a mathematical computation, the statute
specifying that the rates are to be a certain percentage of parity
or support price of the commodity as of a particular date.^®^
Similarly, usual rulemaking procedures are also "unnecessary"
for mere technical changes in regulations. If, for example, the
statute citations contained in a regulation must be altered to
conform to changes in the numbering of the United States Code,
or regulations are rewritten or reorganized purely for style.

"* Id. See text accompanying note 152.

"» 1957 House Study, aupra note 51. at 26-27.

360 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES

with no substantive changes, public procedures are obviously
"unnecessary."

On the other hand, under this exemption agencies should not be
permitted to decide lightly that public procedures are "unneces-
sary." In Texaco, Inc. v. Federal Power Commission ^'° the Third
Circuit Court of Appeals considered an FPC regulation which
had been promulgated without resort to the public procedures of
section 553(b) -(c). The regulation required natural gas compa-
nies to pay a compound interest rate, for the first time, on all
amounts refunded to their customers because of overcharges re-
sulting from new rates subsequently found to be unjustified. After
considering all of the Commission's arguments, the court held
that the rule was invalid because of the failure to follow section
553 (b)-(c) procedures in its promulgation.

The court in Texaco explained that "the rule does not fall
within the 'unnecessary' exception relied on by the Commission
since it cannot be classified as either minor or emergency in
character." ^"^ The court refused to accept the argument that the
section 553 procedures were "unnecessary" because they found
that "the compound rate would affect numerous jurisdictional
gas companies and potentially involves large sums of money." "-
The court also expressly rejected the Commission's contention
that the procedures were "unnecessary" because the new rule im-
posed no obligation on aff"ected parties that could not have been
imposed on them by ad hoc adjudicatory orders in each case.
"The crucial fact is that the Commission elected to proceed in the
case by making a general rule and, when engaged in rulemaking,
it must comply with the procedural requirements imposed on
rulemaking by the Administrative Procedure Act, which it failed
to do. . . ." "3

By holding as it did, the court in the Texaco case seems to
have taken the position that the ability of an agency to achieve
the same result as a rule by another means, such as through ad
hoc adjudication, does not make the requirements of section 553
(b)-(c) "unnecessary" when the agency in fact elects to achieve
that result through rulemaking. This is not the place to fully
explore the wisdom of that result.^'* However, a number of general

110 412 F.2d 740 (3d Cir. 1969).
»" Id. at 743.

"» Id. at 745.

"*Cf. NLRB V. Wyman-Gordon Co., 394 U.S. 759 (1969) (holding an agency order issued
to a party in the course of an adjudicatory proceeding valid and enforceable, even though the
same requirement announced in the course of an adjudication as a prospective rule only would
be void because it failed to follow the rulemaking requirements of § 553). See generally Com-
ment, Wyman-Gordon and the Excelsior Rule, 117 U. Pa. L. Rev. 621 (1969).

REC. 16. APA RULEMAKING EXEMPTIONS 361

points are worth making here. The result in Texaco can be justified
in light of the fact that the APA favors public participation in
rulemaking in all cases except those where very good reasons
preclude it; the fact that the rule was not minor in its effects,
and had a large financial impact on many companies; ^" and the
fact that the agency did make a conscious choice to proceed by
rulemaking which would result in an order of general applicabil-
ity rather than by an ad hoc order in each case.^'" On the other
hand, one of the undesirable effects of this decision may be to
discourage the use of general rules in favor of ad hoc adjudica-
tion, a result which is usually contrary to the sound administra-
tion of regulatory policies.'"

The "unnecessary" exemption should not allow agencies to avoid
section 553 procedures merely on the ground that a rule is
"minor" or "unimportant" because it only has a small impact on
a very limited segment of the public. It is wise to have well-
informed decision-making and citizen-participation in govern-
ment rulemaking which has a relatively small impact on limited
segments of the public, as well as in those actions which have a
great impact on large portions of the public. Consider the follow-
ing case, for example.,

One congressional office got a host of complaints from people, not only
in that area, but throughout the country, on an unimportant rule which
an agency had made without any public notice or hearing, related to
public property. It related to how many pounds of petrified wood you
could take off the premises of a national reservation of some type. And
this agency had thought — well, it is a terrible thing to lose all these
hunks of stone, so they— within their own internal organization, they
came up with one pound, or something like that.

This provoked all this correspondence to Congress.

So the congressional people involved went down to the agency . . .
[which] said— "Oh, well, we realize we made a mistake, we will raise
it to five pounds." So the congressmen went back and said we solved
the problem. The agency said yes, very unimportant.

Well, that provoked ten times more mail than came in the first time,
because it turned out that five pounds just didn't qualify under the
standards by which petrified wood is traded in the market of . . .
collectors ... It has to be a bigger poundage.

Well, the moral of that particular story was that this supposedly mi-
nor rule . . . turned out to be important to a lot of people in this country,
and the fact that the agency did not give public noice, and give the public

"5 412 F.2d at 743 n.7.

>'« Id. at 744 n.9.

"'See United States v. Storer Broadcasting Co., 351 U.S. 192, 203 (1956) ; NLRB v. Ma-
jestic Weaving Co., 355 F.2d 854, 860 (2d Cir. 1966). See also Auerbach, Should Administrative
Agencies Perform Adjudicatory Functions?, 1959 Wis L. Rev. 95 ; Shapiro, The Choice of Huie-
making or Adjudication in the Development of Administrative Policy. 78 Harv. L. Rev. S21
(1965).

362 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES

a chance to express its opinion, caused a heck of a lot of trouble for an
awful lot of people."'

The "impracticable" exemption could adequately deal with
a number of different situations in which a requirement of ad-
vance notice of rulemaking and public participation therein would
be unreasonable. In cases of emergency where a rule is needed
immediately in order to avoid injury or frustration of a program's
objectives, the usual section 553(b) -(c) procedures can be disre-
garded because they are "impracticable." According to the At-
torney General's Manual, for example, "the Civil Aeronautics
Board may learn, from an accident investigation that certain
rules concerning air safety should be issued or amended without
delay ; with the safety of the traveling public at stake, the Board
could find that notice and public rule-making procedures would
be 'impracticable,' and issue its rules immediately." ^'^ Similarly,
where haste is needed, safety rules applicable to trucks and rail-
roads, and rules regarding the marking, packing, and handling
of dangerous items like explosives on such carriers, must also be
permitted to avoid the usual procedures set out in section 553
(b)-(c) on the grounds that such procedures are "impractica-
ble." 180

The Department of Agriculture has properly stated that the
same rationale is equally applicable when the Department must
impose or modify animal or plant quarantines promptly to pre-
vent the spread of diseases or insect pests; or when the Depart-
ment makes orders under the Packers and Stockyards Act of
1921 to continue temporary rate schedules previously authorized
after notice and an opportunity to be heard, if prompt action is
necessary to avoid a reversion to rates and charges that are un-
realistic in light of existing economic conditions; or when the
Department finds that last minute changes are necessary in acre-
age allotments and marketing quota regulations under the Agri-
cultural Adjustment Act of 1938, because farmers must know of
such changes prior to planting.^'*^ To force adherence to the pro-
cedures of section 553 in any of these situations would be "im-
practicable" because time is of the essence.

Consider also the situation presented in the case of Durkin v.
Edwa7'd S. Wagner Co.^^- In a prior decision involving the same

"* ABA Symposium on S.1336, Washington, D.C., Dec. 1, 1966, Transcript 110-11.

179 Attorney General's Manual, supra note 11, at 30-31.

''■* 1957 House Study, supra note 51, at 1769 (Interstate Commerce Commission).

i"/d. 26-27. See also Dighton v. CoflFman, 178 F.Supp. 114 (E.D. 111. 1959), aff'd 279
F.2d 497 (7th Cir. 1960).

1*^=115 F. Supp. 118 (E.D.N.Y. 1953). aff'd per curiam sub nom. Mitchell v. Wagner Co.,
217 F.2d 303 (2d Cir. 1954), cert, denied. 348 U.S. 964 (1955).

REC. Hi. APA RULEMAKING EXEMPTIONS 363

parties, the court had held that particular workers were not
covered bv certain regulations under the Fair Labor Standards
Act. This holding was contrary to the interpretation and practice
of the Administrator of the Wage and Hour Division, an inter-
pretation known and relied upon by the industry involved. As
an immediate response to this decision, and without resort to
usual rulemaking procedures, the Adminstrator promulgated a
rule which included those workers within the relevant regulations.

When he issued the new rule, the Administrator stated that it
would be "impracticable, unnecessary, or contrary to the public
interest" to follow usual rulemaking procedures in the making of
this "clarifying" regulation. " [immediately effective clarifica-
tion of the regulations is essential in order to accomplish the
intent of the present regulations to safeguard the wage standards
in the industry, to eliminate the unfair competitive situation, and
to provide for adequate enforcement of the home work restric-
tions." ^^^ On the basis of this evidence, and the absence of any
evidence to controvert it, the court held that the rule involved was
properly treated as within the section 553(b) (B) exception.*^*

The court's result seems justifiable because any delay in pro-
mulgation of the rule would have encouraged employers to
abandon their previous adherence to the Administrator's interpre-
tation of the earlier rule until a new rule to the same effect was
formally adopted. This would have hurt countless employees who
had come to rely on the fruits of the prior interpretation. It also
would have injured those employees who chose, despite their
competitors' contrary action, to keep their wages at the levels
demanded by the earlier interpretation of the Administrator dur-
ing the period in which the new rule was being adopted with
public procedures.

Either the "impracticable" or "contrary to the public inter-
est" exemption, or both, must be deemed to cover rulemaking relat-
ing to the debt management functions of the Treasury when
notice and public participation would result in frustration of the
Department's operations in that regard, or in other undesirable

"•' Id. at 122.

'** Id. at 122-23. On appeal the court said:

Judpre Galston has found that the defendant's operations fall within the amended regula-
tions and that the regulations were properly promulgated under the Administrative Procedure
Act, 5 U.S.C. § 1003(a) D.C.E.D.N.Y. 115 F. Supp. 118. We see no reason to overturn his
well-reasoned conclusions. While there was no advance notice of the amendment, yet that
was not necessary, both because of its nature as an "interpretive" rule and because of the
Administrator's finding of "good cause" for immediate action, based upon the fact that
other employers in general were complying with this interpretation of the Act and defendant
had long known of the view held by the Administrator.
217 F.2d at 304.

364 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES

consequences. Either of those exemptions could also cover rule-
making such as that determining "discount rates established by
Federal Reserve Banks, and changes in general requirements
regarding reserves of member banks, maximum interest rates on
time and savings deposits, or credit for purchasing or carrying
securities." The delay involved in according prior notice and pub-
lic participation in those cases would ordinarily "prevent the
action from becoming effective as promptly as necessary" to
meet current economic exigencies, thereby making such proce-
dures "impracticable" under those circumstances. The delay in-
volved in adherence to usual procedures might also "permit specu-
lators or others to reap unfair profits or to interfere with the
Board's action taken . . . ." ^^= The next exemption to be discussed
focuses on these latter problems.

An agency can ignore usual rulemaking procedures under sec-
tion 553(b) (B) whenever advance notice would tend to defeat
a rule's purpose because in such situations those procedures would
certainly be "contrary to the public interest." ^^^ The function
sought to be performed by the exemption found in one of the
bills discussed earlier for "matters with respect to which notice
of proposed rulemaking would seriously impair effectiveness of
a rule," is adequately performed by the existing "contrary to the
public interest" terminology. For example, the Securities and
Exchange Commission "has often deemed it inadvisable to sub-
mit a proposed regulatory rule to the industry because of the
danger that certain companies might take advantage of the in-
terim period to effect transactions which the rule is designed to
prevent or control and thus escape the intended regulation of
conduct altogether." ^^

The Department of Commerce has reported that "[i]n the ex-
ercise of [its] priority and allocation functions [under the De-
fense Production Act of 1950], speed in the issuance of orders
and regulations is often essential as prior notice of proposed
governmental action would tend to defeat the purpose intended
to be accomplished thereby. For example, notice of intention to
place certain materials under production control or to limit ac-
quisition thereof might create panic buying in an effort to get
the jump on the regulation and on competitors." ^^^ In such cases
the Bureau of Defense Services Administration properly invoked

'*M2 C.F.R. § 262.2(e) (1969). See also S. 518 Hearings, supra note 30, at 366-67.
^^ See 19U1 Hearings, supra note 17, at 812. See also Attorney General's Manual, supra
note 11, at 31.

*" B. Schwartz, An Introduction to American Administrative Law 62 (1958).
1** 1957 House Study, supra note 51, at 115.

REC. IG. APA RULEMAKING EXEMPTIONS 365

the section 553(b) (B) exemption on the pfrounds that adherence
to usual procedures in that situation would be "contrary to the
public interest." ^'''' Similarly, the Department of Interior rule plac-
ing: a moratorium on applications respecting: the public lands,
would also fit within the exception.

There is also no reason why the "contrary to the public inter-
est" language of section 553(b) (B) cannot be used satisfactorily
to work an overt accommodation between the need for public
rulemaking procedures on the one hand, and the need for inex-
pensive, expeditious, effective, and efficient government adminis-
tration on the other. The function performed by language like
"occasion delay or expense disproportionate to the i)ublic inter-
est," which appeared in one of the bills discussed previously, can
easily be performed by balancing the relevant considerations
under a standard such as "contrary to the public interest."

The "contrary to the public interest" terminology should allow
the Department of Labor an exemption for the wage determina-
tions it makes under the Davis-Bacon and related acts. Because
of the especially large number of such "rules" that the Depart-
ment must continually make during a limited period, required
adherence to usual rulemaking procedures in that situation would
cause an unusually large delay and/or increase in costs of all
kinds. These extraordinary deleterious consequences resulting
from the peculiar facts of the administration of this program
outweigh any positive good that might result from requiring
adherence to normal rulemaking procedures. The existence of
seemingly successful alternative procedures to provide interested
persons with adequate notice of, and a chance to contribute views
in relation to, those wage determinations eliminates any possibil-
ity that the Department should have to adhere to section 553
procedures in this situation. ^^°

"» Id.

^""S. 518 Hearings, supra note 30, at 92, 95 (statement of the AFL-CIO). In addition, the
Solicitor of Labor stated:

The actual wage determination procedure is initiated by the procurement agency, which
submits its request for a finding of wage rates prevailing in the locality of the propose<l
project for the various classes of laborers and mechanics whose employment is required.

The request is usually made about thirty days before any advertisement of specifications
or the beginning of negotiations, as the case may be.

Where the information on hand as a result of the continuing program referred to is
sufficient to make findings, a decision is made.

If the information is not sufficient, a field survey is made. In the course of the survey,
local labor organizations, contractors, contractors' groups and public agencies are contacted.
Hearings may also be held in order to amplify further the record upon which findings are
to be based.

When the findings are made, and the wage determination is issued to the requesting
agency, copies of the wage determination are promptly sent to labor organizations and
contractor associations with the understanding that they will be distributed to any local
affiliates which may have an interest in the wage determination. This is done in order to

366 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES

Similarly, the "contrary to the public interest" standard
found in section 553(b) (B) should permit exemptions for other
extraordinary situations. Where the delay and costs involved are
in fact so very large, due to the special facts of the case, that they
outvi^eight the strong public interests favoring adherence to usual
rulemaking procedures, an exception could be allowed. More than
just "any increase in cost or delay" will be necessary to justify
such an exception under the "contrary to the public interest"
standard. The facts will have to demonstrate that an atypically
large delay or increase in cost will result from adherence to
normal rulemaking procedures, and that the extraordinary delay
or cost is not outweighed by the benefits of adherence to those
usual procedures. Situations of this sort will be relatively
few. Those increased costs and delays which are ordinarily to be
expected are properly treated by the Act as an acceptable quid
pro quo for the important benefits achieved by requiring advance
notice and public participation under section 553.

Section 553(d) (3) should perform the same function for sec-
tion 553(d) as section 553(b) (B) performs for section 553(b)-
(c). According to section 553(d) (3), an agency can dispense
with the section 553(d) required publication or service of a sub-
stantive rule at least thirty days before its effective date, when-
ever the agency decides to do so "for good cause found and pub-
lished with the rule." This "good cause" exemption should give
agencies at least as much discretion to avoid the application of
section 553(d) in appropriate cases as the "impracticable, un-
necessary, or contrary to the public interest" exemption gives
them to avoid the application of section 553(b) -(c). Indeed,
the former may give agencies even more discretion than the latter
because the guiding terms "impracticable, unnecessary, or con-
trary to the public interest" are conspicuously absent from section
553(d)(3).

Nevertheless, in order to make the requirements of section 553

afford interested persons an opportunity to present timely requests for changes in the
wage determination upon the basis of any evidence that they may have.

Interested persons may appeal for review of wage determinations by the Department's
Wage Appeals Board, which is empowered to pass upon all questions of law and fact.

Substantive changes may be made in wage determinations without exception up to the
ten-day period before the opening of bids for the construction work. Thereafter, and
until the award of the contract, a substantive change may be made only where the
procurement agency finds that there is a reasonable time in which to notify the bidders of
the change.
Id. 240.

In those cases in which the Department serves personal notice of the wage determinations
on the parties "subject thereto," or those parties have notice thereof as provided by law, the
Department can dispense with the usual advance notice and public participation requirements
because of § 553(b), and need not even rely on a modified § 553(b) (B). See also text accom-
panying note 203 infra.

REC. 1(5. APA RULEMAKING EXEMPTIONS 367

(d) meaninji:ful, the exemption from its terms should be construed
to be as broad, but no broader, than section 553(b) (B). If that
is so, the "good cause" required by section 553(d) (3) must, like
the "good cause" required by section 553(b) (B), be predicated
on a finding that adherence to usual procedures is "impracticable,
unnecessary, or contrary to the public interest." The legislative
history of the "good cause" exception in section 553(d) (3) sup-
ports the conclusion that the two exemptions should be treated
as congruent. The House Report on the APA states that :

[This] exception— upon good cause found and published — is not an
"escape clause" which may be exercised at will but requires legitimate
grounds supported in law and fact by the required finding. Many
rules . . . may be made operative in less than 30 days because of in-
escapable or unavoidable limitations of time, because of the demonstrable
urgency of the conditions they are designed to correct, and because the
parties subject to them may during the usually protracted hearing and
decision procedures anticipate the regulation.'"

Previous discussion should demonstrate that if the section 553
(a) (2) exemptions under consideration were eliminated, the
exclusions found in section 553(b) (B) and section 553(d)(3)
could adequately handle any peculiar problems created thereby.
Where a rational balancing of the relevant interests would indi-
cate the desirability of an exception from the requirements im-
posed by section 553(b)-(d) for particular rulemaking, the above
"good cause" exemptions could suffice to achieve the result.

No special exemption is needed from the right to petition
provision of section 553(e) if the subsection (a)(2) exclusions
are repealed. Interested parties should always have the right to
petition for the issuance, amendment, or repeal of a rule. As
noted earlier, the only obligation which that right imposes on
an agency is the duty to follow its own rules with respect to
such petitions, and the duty to respond under section 555(e) by
giving "[pjrompt notice ... of the denial in whole or in part
of a . . . petition . . . accompanied by a brief statement of the
grounds for denial." If the need arises, an agency may respond to a
group of similar petitions as an entity. Consequently, no situa-
tion involving one or more petitions for a rule relating to the
subsection (a) (2) subjects would seem to require even a qualified
exemption from section 553(e). Currently no exemption from the
right to petition requirement is deemed necessary for any rule-
making already subject to the terms of section 553. In light of the

"' S. Doc. No. 248, supra note 2, at 260. See also id. 201 ; Buckeye Cablevision, Inc., v.
F.C.C.. 387 F.2d 220, 228 n.34 (D.C. Cir. 1967).

368 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES

importance of that right, and the minor burden it imposes on
agencies, this position seems fully justifiable.

If the right to petition continues unhampered by any excep-
tions even after the subsection (a) (2) exemptions are removed,
an important salutary consequence will follow. In every case
where usual public procedures are dispensed with prior to the
promulgation of a rule because the qualified exemptions of sec-
tion 553(b) (B) are applicable, interested parties will have an
effective chance to express their views on that rule subsequent
to its enactment. They can file a petition for the amendment,
repeal, or modification of the rule in question, including a state-
ment of their reasons therefor. The agency will then be obliged
to respond, as section 555(c) requires, with "[p]rompt notice
... of the denial in whole or in part of . . . [the] petition . . .
accompanied by a brief statement of the grounds for denial,"
unless it aflfirms a prior denial or the denial is self-explanatory.
It should be recalled that the previously discussed bills to re-
form section 553 required initiation of public procedures within
a stipulated period after an emergency rule was promulgated in
order to continue its effectiveness. Such an approach has merit in
assuring public participation subsequent to a rule's issuance in
those cases in which it was impossible beforehand. The right to
petition should provide some of the same protection.

The section 553(b) (B) and section 553(d) (3) exemptions im-
pose a special obligation of disclosure on agencies utilizing those
provisions. An agency must incorporate in the rules issued without
following usual procedures the necessary statement of "good
cause" predicated upon a finding that adherence to section
553(b) -(d) is "impracticable, unnecessary, or contrary to the
public interest"; it must also include a brief statement of the
reasons for that finding. In cases where the exemption is utilized
based on a finding with respect to a whole class of cases, only
one such full publication relating to the whole class should be re-
quired. Rules in that class subsequently issued without resort
to usual procedures would only need to refer to the prior full
publication of findings and reasons, and give its citation. To be
of value, the reasons listed in the rules as justification for the
failure to follow usual procedures must, of course, be fairly
specific. Declarations in the language of the Act will not satisfy
this requirement and should be deemed inadequate under the
statute. At the same time the required statement of reasons need
not be so detailed as to be unduly onerous.

The above disclosure obligation will have two salutary effects.

REC. 16. APA RULEMAKING EXEMPTIONS 369

First, such a requirement will force the agency to consider very
carefully its reasons for each such action. Second, by requiring
an official statement of the agency's reasons for using the ex-
emption, judicial review of that action will be facilitated. If
such action is challenged in a judicial proceeding, the court can
test its validity against the reasons provided in the prior publica-
tion. Having stated the reasons for their conduct in this regard
both formally and publicly, agencies will presumably not be
allowed to assert others as justifications if the ones originally given
prove to be inadequate. This should keep agencies both thoughtful
and honest in the use of this exemption.

The survey prepared specially for this study asked all federal
agencies the following question :

Why are the several specific exemptions currently contained in § 553(b)-
(e) insufficient to deal with any disadvantages that might be encountered
by your department or agency if all of § 553(a) (l)-(2) was repealed?
Among these specific exemptions just referred to is that contained in
§ 553(b) (B) providing that public notice of rulemaking and participa-
tion by interested persons in rulemaking is not required "when the agency
for good cause finds (and incorporates the finding and a brief statement
of reasons therefor in the rules issued) that notice and public procedure
thereon are impracticable, unnecessary, or contrary to the public interest."

Agencies making rules presently exempted by subsection (a) (2)
from section 553 responded in various ways to this question.
These responses, and the following discussion of section 553(b)
(B), may also be considered applicable to the section 553(d) (3)
exemption since, as noted earlier, the requirements of that ex-
emption are probably congruent with those of section 553(b) (B).
Some respondents to the above question insisted that the section
553(b) (B) exemption was an insufficient substitute for subsec-
tion (a) (2) because the latter is necessary as it is, and the former
is not as broad as the latter.^-'- Responses of this sort are of little
help in evaluating the impact that the proposed changes may
have, and they in no way detract from the solution previously
suggested. They amount to no more than an insistence that sec-
tion 553(a) (2) is necessary, and that nothing less is acceptable,
without any explanation why other existing exemptions, including

'"= 1969 Survey, supra note 27 (responses of Atomic Energy Commission; Post Office; Forest
Service and Soil Conservation Service, Department of Agriculture). For example, the Post
Office stated:

It is considered that the specific exemptions contained in Sec. 553(b) -(e) are not well
adapted to serve as substitutes for the subject area exemptions. It is believed that the
exemption stated in Sec. 553(a) [21 reflects a proper and Keneralized findiing that the
provisions of Sec. 553(b) -(e) are not appropriate for rulemaking in these subject matter
areas and that the reasons underlying this will continue despite repeal of Sec. 553(a) [2].

370 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES

section 553(b) (B), are inadequate substitutes for the subject
matter exemptions of subsection (a) (2) .

A frequent objection to section 553(b) (B) as a substitute for
section 553(a) (2) is that making the findings required by the
former would constitute too great an administrative burden on
the agencies. ^^^ For example, the Department of Defense stated
that "admittedly, the exemption is a broad one in which DoD
would rely in issuance of any highly significant rule. . . . But
the scope and volume of substantive rulemaking in the Depart-
ment makes impracticable compliance with the unwieldy require-
ment for a 'finding and a brief statement of reasons' for the
'good cause.' " ^^* In light of the fact that the statement of findings
and reasons is only required in those cases in which the agency
opts out of the usual procedures, and that it can be made for a
whole class of rulemaking in the few instances where that can
be justified on the basis of the special facts and circumstances
discussed previously, this objection seems unsound. The burden
involved here consists only in the agency setting down, in each
situation where justified, the finding that public procedures are
"impracticable, unnecessary, or contrary to the public interest,"
and a brief statement of the reasons why that is so. To some
extent agencies should be doing that in any case — if they are
in fact living up to their more general responsibilities to accord
as much participation in rulemaking as possible, consistent with
their other obligations. The burden, therefore, seems to be both
of a kind and quantity that the agencies should be willing and
able to bear in light of the attendant benefits.

A number of responses to the above question gave another rea-
son why current exemptions contained in section 553(b) -(e)
are inadequate substitutes for the subject exemptions of section
553(a)(2). It is said that the scope of section 553(b) (B) is
unclear and uncertain. Reliance upon that exemption, therefore,
would not clearly handle all the problems created by repeal of
section 553(a) (2); and it would probably result in much litiga-
tion as to the scope of the subsection (b) (B) exemption, causing
undue delay in the execution of agency programs and the like.^®^
"Uncertainty about the scope of the exemption" and the fact
that "such a finding [as is required by section 553(b) (B)] is
subject to challenge in the courts making uncertain the validity

"" 1969 Survey, supra note 27 (responses of Department of Defense; FHA Commodity
Stabilization Division, Department of Agriculture; Veterans' Administration; Small Business
Administration; Office of Economic Opportunity).

'"* 1969 Survey, supra note 27.

'*= 1969 Survey, supra note 27 (responses of Small Business Administration; REA, Depart-
ment of Agriculture; Department of Commerce; Department of Defense).

REC. 1<>. APA RULEMAKING EXEMPTIONS 371

of any rule issued under this exemption" was noted. ''"^ The De-
partment of Agriculture's Rural Electrification Administration
responded that the attendant possibilities for delay could be too
easily utilized by one who wanted to obstruct one of the agency's
programs."'

It is true that the terms "good cause" and "impracticable, un-
necessary, or contrary to the public interest" are not as precise as
those which categorically exempt all rulemaking "relating to
. . . public property, loans, grants, benefits, or contracts." The
former terms are more difficult to apply. They involve some bal-
ancing because of the required special assessment of the facts
in each case. Therefore, their application is not as obvious or
indisputable as that of section 553 (a) (2) .

Nevertheless, as previously noted, the language of section
553(b) (B) can adequately deal with all of the problems created
by a repeal of section 553(a) (2). It need not be as unclear as
the opponents in this area claim. If section 553(a) (2) is repealed,
a legislative history could also be created to clarify further the
scope of section 553(b) (B). Moreover, litigation of the scope and
proper applicability of "good cause" and "impracticable, un-
necessary, or contrary to the public interest" is not apt to be any
more endless or obstructive here than it is elsewhere. And in
light of the above discussion, it is not in fact likely, in the over-
whelming number of cases, to have any significant impact on
the agencies' ability to perform their functions properly. Stare
decisis should have a substantial effect within a brief time. It
should also be noted that although wise and honest use of the
section 553(b) (B) exemption by the relevant agencies will not
forestall all litigation, it will forestall some.

In the end, however, it must still be admitted that there re-
mains a real difference in clarity between the applicability of
section 553(a) (2) and section 553(b) (B), and that some delays
may be caused by litigation involving the latter. But these con-
sequences are a price worth paying for the largely increased
scope of the guarantee of public participation in rulemaking in-
volved. After all, no showing has been made that they will have

'«" 1969 Survey, aupra note 27 (response of Department of Defense).

""Just as the uncertainty of the scope of the other exemptions of Sec. 553(b)-(e) invites
litigations which could be used ... to obstruct the proper functioning of the agency
... so this good cause exemption could invite obstructive litigation. For example. Sec.
553(b) (B) requires a brief sUtement of the reasons for finding the notice and public
procedure impracticable, unnecessary or contrary to the publiic interest. The sufficiency
of the agency's reasons might be attacked in a suit. Whether or not RE:A's action iis
ultimately sustainetl, the litigation in the meantime could defeat the purpose of the REA loan.
1969 Survey, supra note 27.

372 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES

any serious ill effects in the mass of cases. If the fear really is
that agencies will have to be careful in utilizing this qualified
exemption, and that their hands will be tied by it to some extent,
they are right. Similarly, if the fear is that in particularly close
cases, the form of this exemption will cause agencies to utilize
normal rulemaking procedures rather than risk possible litigation
resulting in invalidation of the rule,^^'' that too is correct. Both of
these results, however, are acceptable in light of the importance
of the policy favoring public participation in rulemaking.

A number of very important agencies from the point of view
of the section 553(a)(2) exclusions admitted that the conse-
quences resulting from a repeal of those exemptions could be
handled by the remaining exemptions contained in section 553(b)-
(e). The Department of Health, Education and Welfare noted
that "the several specific exemptions contained in section 553(b)-
(e) are sufficient to deal with the bulk of disadvantages that
might be encountered if section 553(a) (l)-(2) were repealed." ^^^
In light of those other specific exemptions, especially section
553(b) (B), the Department of Transportation said that it "could
live" with the repeal of the subsection (a) (2) exemptions under
discussion and "would not object to [their] . . . repeal." -"° Sim-
ilarly, the Department of Labor stated that the repeal of the
exemptions relating to "public property, loans, grants, benefits,
or contracts" would cause that agency "no undue hardship in
view of the specific exemptions contained in section 553(b)
(g) '> 201 j^ (jj(j express an exception, however, based on the as-
sumption that its wage determinations problem might not be
solved adequately by the latter exemption as it is now deemed to
operate. Since the revised section 553(b) (B) proposed here would
enable the Department to solve this problem for that whole class
of rulemaking by one operation, their doubts should be assuaged.

The same should be true of the Treasury Department. It ad-
mitted that

108 "pj^g Department of Agriculture's Farmers Home Administration feared that reliance
solely upon the § 553(b) (B) exemption might discourage issuance of rules and needed changes
in rules. See 1969 Survey, supra note 27. This consequence seems highly improbable. More
likely is the consequence noted in the text above.

•" 1969 Survey, supra note 27. See also the following responses to the 1969 Survey. The
National Aeronautics and Space Administration stated: "On balance . . . NASA should not
find itself greatly disadvantaged by a removal of [§ 553 (a)] . . . ." NASA went on to note
that the exemptions presently contained in §§ 553(b)-(e), especially § 553(b) (B) "should
be adequate to prevent unreasonable, costly and empty exercises in rulemaking procedures
from resulting." The Office of Economic Opportunity admitted that "the good cause exemp-
tion would of course serve as some protection against the undue formalism of the A. P. A.
rulemaking procedures"; but it opposed repeal of § 553(a)(2).

-'" 1969 Survey, supra note 27. The Department said, however, it would object to repeal of
the "agency management and personnel" exemption of subsection (a)(2).

2»i 1969 Survey, supra note 27.

REC. l(i. APA RULEMAKING EXEMPTIONS 373

if all of Section (a)(l)-(2) was repealed, in the preparation of reRU-
lations which could not be published until announced by the Secretary,
and in which speed and its requisite corollary secrecy are necessities, and
advanced publicity and public participation opportunities, impossibilities,
we recoprnize that we could resort to publication in our rule of a find-
ing that notice and public procedures are contrary to the public interest.

But the Department was still concerned because it thouj?ht "an
amendment of the nature indicated by this question does not take
into account the continuing functions of the Treasury in its debt
management operations."-"- As noted earlier, to the extent that
usual procedures are in fact "impracticable, unnecessary, or con-
trary to the public interest" with respect to rulemaking involved
in those functions, the Department has no cause for concern.
However, to the extent that concern is a product of a desire for a
broader exemption, the equities involved suggest it should not
be honored.

None of the objections stated to an "impracticable, unneces-
sary, or contrary to the public interest" type solution to the prob-
lem under consideration has sufficient merit to discourage utili-
zation of that approach. Consequently, a repeal of the section
553(a)(2) exemptions "relating to public property, loans,
grants, benefits, or contracts" accompanied by a construction of
section 553(b) (B) and section 553(d) (3) along the lines suggest-
ed would be an excellent means by which to reconcile the con-
flicting societal interests involved. The exemptive language should
not and need not be so broadly construed as to render it a mean-
ingless limit on agency discretion forestalling adequate public
participation in rulemaking, nor so narrowly construed as to
render it an ineffective tool to deal with the real problems which
admittedly might be faced by certain agencies if section 553(a)
(2) was repealed.

As noted earlier, this kind of qualified exemption will remove
from the requirements of the rulemaking section virtually all of
those situations now used to justify the across-the-board un-
qualified exceptions presently contained in section 553(a) (2) =
Unlike the latter provision, however, the former has the advan-
tage of excluding from the strictures of section 553(b) -(d) only
those specific rulemaking situations where competing interests of
a high order clearly outweigh the interests in public participation.

Furthermore, repeal of the section 553(a)(2) exemptions in
question will also be advantageous because the competing values
involved will be more adequately accommodated in another way.

-0- Id.

374 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES

Unlike the current unqualified exemption of subsection (a) (2)
rulemaking from every provision of section 553, the solution pro-
posed would only exempt particular instances of such rulemak-
ing, v^^here essential, from the specific subsections whose applica-
tion would be unreasonable in those instances. So, even if prior
public participation under section 553(b) -(c) should be eliminat-
ed in a particular case of rulemaking, the agency will still be
required, as section 553 (e) unqualifiedly demands, to give persons
a right to petition for the issuance, amendment, or repeal of a
rule. As noted previously, exemption from that requirement seems
never to be justified.

One final point with respect to the scope of the statutory re-
form proposed here deserves note. Rulemaking is defined by the
APA as the process for formulating "agency statements of
general or particular applicability and future effect designed to
implement, interpret or prescribe law or policy . . . ." ^°^ The pro-
cedures of section 553 are better adapted to dealing with rule-
making of general applicability than to dealing with rulemaking
of particular applicability. Therefore, requiring adherence to
the procedures of section 553 in the case of the latter class of
subsection (a) (2) rulemaking may create larger burdens and
smaller benefits than requiring adherence to those procedures for
similar rulemaking of general applicability.

However, by using one of two exemptions, an agency can avoid
the trouble of opening too wide the role of public participation
in rulemaking of particular applicability. To the entent that it
is more "impracticable, unnecessary, or contrary to the public
interest" to follow normal procedures for subsection (a) (2)
rulemaking of particular applicability than for such rulemaking
of general applicability, the section 553(b) (B) and section
553(d) (3) exemptions can adequately handle the problem. As a
result, one may expect greater resort to the section 553(b) (B)
and section 553(d) (3) exemptions for subsection (a) (2) rulemak-
ing of particular applicability than for such rulemaking of gen-
eral applicability.

Furthermore, section 553(b) permits agencies to avoid prior
publication of notice in the Federal Register if "persons subject
thereto are named and either personally served or otherwise have
actual notice thereof in accordance with law." This means that
after the repeal of section 553(a) (2), agencies will still not be
required to publish advance notice of such rulemaking of particu-
lar applicability in the Federal Register if they only do what is

'5 U.S.C. § 551(4) (Supp. IV. 1969) (emphasis added).

REC. 16. APA RULEMAKING EXEMPTIONS 375

fair in any case: give the persons "subject thereto" personal
notice and "an opportunity to participate in the rulemaking
through submission of written data, views, or arguments." This
seems to be the result of a reconciliation of the language "persons
subject thereto" in section 553(b) and "interested persons" in
section 553(c) .

To continue the section 553(a) (2) exclusion as applied to rule-
making of particular applicability would mean that rules of this
sort would be subject neither to the statutory provisions govern-
ing rulemaking procedure nor to the statutory provisions govern-
ing adjudicatory procedure. This result would be most unfortu-
nate. Some clear statutory protection ought to be given affected
parties in situations where agencies make rules of particular ap-
plicability relating to "public property, loans, grants, benefits, or
contracts." The particular persons involved have much at stake,
and the public interest in assuring that the official decision-makers
are adequately informed in such cases is great, even though
not as great as in cases of rulemaking of general applicability.
Consequently, until that time when the general definition of "rule"
used in the APA is changed so that "rulemaking" of particular
applicability is treated as adjudication, the procedural protec-
tions of section 553 should be made applicable to all subsection
(a) (2) regulation formation. The various exemptions now con-
tained in section 553 will adequately deal with any special prob-
lems that arise from application of that provision to such rule-
making of particular applicability.

VIII. Conclusion

Serious proposals for the elimination of the section 553(a) (2)
exemptions for rulemaking relating to "public property, loans,
grants, benefits, or contracts" have been made since at least
1955. The Task Force Report on Legal Services and Procedure of
the Hoover Commission noted in that year that

many rules governing proprietary matters, such as procedures respecting
public property, loans [grants], benefits, and contracts, are of vital
importance to the members of the public affected by them. Such rules
often have a direct bearing upon private interests, and participation in
the rulemaking process by those affected is appropriate and to be de-
sired.^

The Task Force concluded that "proprietary functions may . . .
be effectively executed by agencies with public participation in
the rulemaking process" and, therefore, what is now section 553

=<" Task Force Report, supra note 6, at 158-59.

376 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES

(a) (2) should be repealed. ^"^ It was convinced that "the require-
ment of public participation [in those cases] does not subject
departments and agencies to an unreasonable procedural bur-
den." -°^ Since that time several bills have sought to accomplish
the same result: elimination of section 553(a) (2) as it is pres-
ently constituted.

This study demonstrates that the 1955 Task Force Report of
the Hoover Commission and the bills since introduced into Con-
gress were correct. The unqualified exemptions from section
553 for all rulemaking relating to "public property, loans, grants,
benefits, or contracts" should be repealed. The reasons advanced
to justify those exemptions are not sufficient. At most, those
justifications dictate the need for a more narrowly tailored ex-
emption from usual rulemaking proceedings than is currently
found in section 553(a)(2). The existing "impracticable, un-
necessary, or contrary to the public interest" provision found in
section 553(b) (B) and the "good cause" exemption found in sec-
tion 553(d) (3) provide such an exclusion from the requirements
of section 553(b)-(d). They would work an adequate accommo-
dation of the competing interests involved, carefully balancing the
need for public participation against the need for effective, effi-
cient, expeditious, and inexpensive government administration.
And an exemption from the right to petition conferred by section
553(e) seems no more necessary or justifiable for subsection (a)
(2) rulemaking than for rulemaking already covered by section
553.

The solution proposed here to the difficulties arising from the
repeal of section 553(a)(2) is bound to put some additional
burden on the agencies who will have to implement it. But the
burden involved in agency use of the section 553(b) (B) and sec-
tion 553(d) (3) exemptions is not likely to be very large. Further-
more, any administrative burden that is in fact likely to result
from the proposed solution would seem clearly outweighed by the
benefits obtained. Repeal of section 553(a) (2) will, after all,
guarantee increased public participation in rulemaking of the
kinds currently excluded from usual procedures by that provision.

A discouraging discovery made in the course of this study
has been that a number of agencies opposing modification of
section 553(a) (2) do not seem to have restudied their position
carefully and seriously during the last few years. Statements
opposing repeal of these exemptions that were prepared as long

^°^ld. 159.
2"« Id. 160.

REC. 16. APA RULEMAKING EXEMPTIONS 377

as five, ten, or even thirteen years ago are still used by some
agencies as the principal basis for articulating their current
position on this subject. The language of a few such statements
has sometimes not even been modified to reflect subsequent
changes in the law, or obvious changes in circumstances, when
they were reissued in light of a new inquiry on this subject. It
is hoped that the present study can at the very least provoke
those agencies who have opposed modification of section 553(a)
(2) into conducting a serious and careful reconsideration of
their position on the question. That reconsideration should result
in this realization: repeal of the exemptions for rulemaking re-
lating to "public property, loans, grants, benefits, or contracts"
need not seriously disadvantage them in light of existing exemp-
tions contained in other portions of section 553.

In conclusion, it should be reiterated that the proposal made in
this study would only affect the section 553(a)(2) exemptions
for rulemaking relating to "public property, loans, grants, bene-
fits, or contracts." The current proposal would not affect, in any
way, the existing section 553(a)(1) exemption for rulemaking
involving a "military or foreign affairs function," or the existing
section 553(a) (2) exemption for rulemaking relating to "agency
management or personnel." Similarly undisturbed would be the
exemption from section 553(b) -(d) of all "interpretative rules"
and "statements of policy" found in section 553(b) (A) and sec-
tion 553(d) (2). The above exemptions, when combined with sec-
tion 553(b) (B) and the "good cause" exemption found in section
553(d) (3), should provide fully adequate leeway for all agencies
to meet their responsibilities properly, even after the repeal of
section 553 (a) (2).

RECOMMENDATION NO. 17

RECRUITMENT AND SELECTION OF HEARING EXAM-
INERS; CONTINUING TRAINING FOR GOVERNMENT
ATTORNEYS AND HEARING EXAMINERS; CREATION
OF A CENTER FOR CONTINUING LEGAL EDUCATION
IN GOVERNMENT

RECOMMENDATION

A. Recruitment and Selection of Hearing Examiners

1. The Civil Service Commission should enlarge the base of
recruitment and the number of qualified candidates available for
appointment to hearing examiner positions by recognizing trial
experience as one basis for qualification.

2. The Civil Service Commission should depart experimentally
from the selective certification system as now practiced in the
appointment of hearing examiners. Instead, it should develop a
system under which the number of candidates qualified for hear-
ing examiner positions is enlarged through the use of a general
register for all agencies, with additional credit for specific rele-
vant professional experience or selective certification for those
agencies which demonstrate to the Civil Service Commission's
satisfaction a current need for personnel possessing a specific
background. The purpose of this experiment should be to permit
meaningful comparative evaluation with the system now in ef-
fect, A report should be made to the Administrative Conference
after 3 years of experience.

To aid the Civil Service Commission in effectuating the ob-
jective of this part of the recommendation, the Chairman of the
Administrative Conference should appoint special committees
from time to time to evaluate the standards of specific relevant
professional experience proposed to the Civil Service Commis-
sion by any agency as being required for its work. Present selec-
tive certification agreements should continue until new stand-
ards have been adopted by the Civil Service Commission.

3. The Civil Service Commission should study and, if practi-
cable, should institute an experimental intern program to supple-
ment the direct appointment of hearing examiners from the reg-
ister. Without finally deciding the issue, the Conference urges
the Commission to consider anew whether successful interns
should automatically be placed in hearing examiner positions.

378

REC. 17. GOVERNMENT ATTORNEYS 379

4. The Veterans Preference Act should be amended to permit
the selection of examiners for each vacancy from the top 10 avail-
able persons then appearing on the register, determined on the
basis of examination and ranking without reference to veterans
preference.

B. Continuing Training for Government Attorneys and

Examiners

1. Agencies employing attorneys and hearing examiners
should encourage their participation in programs of continuing
legal education. Budgets should include adequate funds for per-
sonnel so that attorneys and examiners may be released for rea-
sonable periods of time to accomplish added training. Agencies
should take all suitable steps to assure wide knowledge of train-
ing opportunities.

2. Agencies should also explore ways in which they can sup-
port the professional training activities of the Federal Trial Ex-
aminers Conference, bar associations, foundations, the Civil
Service Commission, law schools, the individual agencies with
parallel legal interests, and other institutions offering appropriate
training for attorneys and examiners.

C. Creation of a Center for Continuing Legal Education

in Government

1. A center should be established in the Washington area for
the continuing legal education of Government lawyers, hearing
examiners, and private attorneys practicing before Government
agencies. The center should also promote coordinated programs
within the Government and with specialized segments of the
organized bar; stimulate and engage in the preparation of man-
uals, research materials, and other publications in support of
such continuing legal education; and provide a mechanism for
the exchange of information concerning professional problems of
Government attorneys. The center, under the direction of law-
yers, should be oriented toward applied legal problems. The Civil
Service Commission should make available to it the benefit of the
Commission's experience in establishing and operating Federal

380 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES

Executive institutes and centers. The Federal Administrative
Justice Center proposed by the American Bar Association in a
resolution adopted by the American Bar Association's House of
Delegates in January 1969, as an example, would serve the pur-
pose of the present recommendation.

2. The establishment of the Center should not diminish each
agency's present responsibility to provide continuing legal edu-
cation for its own lawyers through "in-house" training programs,
but the Center should support and assist all agencies in main-
taining these programs at a high level of effectiveness.

VIEWS OF THE COUNCIL ON THE RECOMMENDATION
OF THE COMMITTEE ON PERSONNEL

At its meeting on September 29, 1969, the Council of the Ad-
ministrative Conference took the following action concerning
proposed recommendations 1 through 4 of the Committee on Per-
sonnel concerning a change in the title for Hearing Examiners.

1. The Council objects to the name Administrative Chancellor
as proposed in recommendation 2. The Council also objects to the
name Administrative Trial Judge which has been proposed by
the minority members of the Committee. If the name is to be
changed, the Council feels that the name adopted should be one
which does not have the disadvantages of the names proposed.

2. Since in its view an acceptable title has not yet been pro-
posed, the Council does not express an opinion on proposed Rec-
ommendation 1.

3. If it is determined to change the name of Hearing Exam-
iners to an acceptable title, the Council is in agreement with
proposed recommendations 3 and 4.

Mr. Harold Russell, a member of the Council, wishes to be re-
corded as in favor of proposed recommendations 1, 3, and 4 and
in favor of the name "Administrative Trial Judge" for the posi-
tion now named "Hearing Examiner." *

* The proposed recommendations 1 through 4 failed of adoption. Matters referred to in the
attached Committee report as Recommendations 5 through 14, and which were adopted, are
incorporated as subparagraphs of Recommendation No. 17.

REPORT OF THE COMMITTEE ON PERSONNEL IN
SUPPORT OF RECOMMENDATION NO. 17

Prepared by

Robert E. Park

Professor of Law

George Washington University

Introduction
The Committee on Personnel has prepared recommendations
for the Conference in four areas :

(1) a change of title for section 11 Hearing Examiners;

(2) changes in the examination and appointment proce-
dures for Hearing Examiners ;

(3) continuing legal education of Hearing Examiners and
Government attorneys ; and

(4) establishment of a center for continuing legal educa-

These topics are not novel. The first three years have been sub-
jected to extensive debate for a number of years and have been
the subject of a variety of proposals, some of them runnmg back
to 1962 and the recommendations of President Kennedys Ad-
ministrative Conference, others to Hoover Commission recom-
mendations, others to parallels in the Report of the Attorney
General's Committee on Administrative Procedure m 1941 and
beyond. The third topic raises proposals which have been tried
in various forms in several departments and agencies and are
offered to strengthen the potential value of these programs and
to encourage their greater use throughout the Government. The
idea of a center for continuing legal education of lawyers in-
volved in the administrative process, which is embodied in the
fourth proposal, has been the subject of extended study by the
American Bar Association. The Committee recommendations are
compatible with the detailed proposal of that organization.

With respect to all of these matters the Committee informed
itself through five days of public hearings in April 1969, supple-
mentary statements and exhibits, a survey of departments and
agencies in June 1969 which invited responses to specific pro-

381

382 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES

posals, and numerous individual contacts with interested lawyers
in and outside of Government.

The third and fourth sets of proposals, although subject to
some debate as to specific details, were broadly supported and
minimally controversial. The first and second sets, however, are
very controversial. The bulk of the Committee's time and' this
report are devoted to these two topics.

A. Change of Title of Hearing Examiners
Recommendation 1

That the title of presiding ofl^cers appointed pursuant to
§ 11 of the Administrative Procedure Act (5 U.S.C. 3105)
should be changed from Hearing Examiner to a title more
clearly reflecting the unique status and responsibilities of
these quasi-judicial ofl^cers.

Recommendation 2

That an appropriate title to accomplish the objectives of
Recommendation 1 would be Administrative Chancellor.

Recom/mendation 3

That the Civil Service Commission effect this change of
title.

Recommendation Jf.

That every department and agency employing such per-
sons effect this change of title, as it is in the public interest
that the same title be used throughout the Government.

Why Change the Title of Hearing Examiners?

The Committee was persuaded that support for a change of
title to something more clearly reflecting the important position
and function of these quasi-judicial ofllicers was overwhelming.
Testimony heard in the public hearings and received in written
form was almost exclusively in favor of such a change. There was
no comparable agreement upon a substitute.

The present title of Hearing Examiner is not readily under-
stood by laymen. It does not suggest to lawyers not familiar with
the agencies the significance given the findings and decisions of
the presiding ofl^icer. It has been confused with and compromised
by the extensive use of the title Examiner for a wide variety of
inferior and clerical officers throughout the Federal and state
Governments. Particularly in hearings such as those conducted

REC. 17. GOVERNMENT ATTORNEYS 383

by the National Labor Relations Board, where the credibility of
witnesses and the full cooperation and respect of counsel and
witnesses may be critical to the orderly and reliable conduct of
the hearings, the title Hearing Examiner does not adequately
suggest the serious character of the hearings. Attempts by agen-
cies to individually dignify their hearings and to remedy this
deficiency, by steps such as referring to hearing officers as Trial
Examiners and referring to them in terms of the traditional
courtesies and deferences of the courtroom, have not proven suf-
ficient. Agencies, such as the Social Security Administration's Bu-
reau of Hearings and Appeals, which deal directly with individ-
ual members of the public, report that parties do not feel the
assurance and confidence they should from the appellate charac-
ter of their hearing because they tend to regard the Hearing
Examiner as merely another bureaucrat in their extended dispute
with the agency. Attorneys who lack familiarity with the regula-
tory agencies also are confused and do not appreciate the inde-
pendence of the Hearing Examiner. Further, since the title is
ambiguous. Hearing Examiners often find it difficult to obtain
the cooperation of Federal and state officials without lengthy
explanations, as when obtaining the use of state courtrooms. And
since the title is neither descriptive of function nor appropriate
to the status of the office, it is suggested, potential applicants for
Hearing Examiner appointments are not attracted to the office.
A more appropriate title would, presumably, have a beneficial ef-
fect upon the morale, recruitment and retention of the entire
corps of Examiners.

What Should the Title Be?

Although the need for a title change is almost consensual, the
choice of the title to be substituted has produced a great deal of
controversy. The title proposal receiving the strongest support
has been "Administrative Trial Judge." It has been sponsored by
the Federal Trial Examiners Conference and by the Administra-
tive Law Section of the American Bar Association, has been the
subject of legislation introduced by Senator John G. Tower of
Texas, is apparently unanimously supported by the Hearing Ex-
aminers themselves, was the overwhelmingly favored proposal
at the April public hearings of the Committee on Personnel, and
has won the support or general acceptance of a number of agen-
cies and departments, including the Federal Power Commission,
the National Labor Relations Board, the Federal Maritime Com-
mission, the Bureau of Hearings and Appeals of the Social Se-

384 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES

curity Administration, the Department of Housing and Urban
Development, the Small Business Administration, the Post Office
Department, the Department of the Army, and the Federal Com-
munications Commission.

Although some criticism of the term "trial" as non-descriptive
of the function of Examiners in several agencies was received,
the bulk of opposition was to the term "judge." It has been sug-
gested that "judge" misdescribes the function of the Examiner
and the hearing; that it will create confusion with members of
the Federal Judiciary; that it suggests an independence of agency
policy and of agency fact finding and decision powers that is
quite inconsistent with the statutory objectives of the Congress;
that it will induce unnecessary, undesirable and counterproduc-
tive judicialization in the hearing process; that it is not needed
and is inappropriately honorific for the office of Hearing Exam-
iner; that it would be incongruous with the reviewing functions
of agency review boards and of the Boards and Commissions
themselves; that it would suggest that the Examiner's decision
has the status of a judicial determination; that to apply it across
the board to all Section 11 Examiners would not recognize the
considerable range in grade from GS-13 to GS-16 of Examin-
ers, nor in the responsibilities and public significance of their re-
spective functions ; that the change is too drastic and that nothing
indicates that the adoption of "judge" would accomplish the bene-
fits claimed for it by the proponents ; and that it may, especially
when coupled with the word "trial," suggest an excessively ad-
versarial character and mislead counsel and interfere with the
efficient conduct of the proceedings. Agencies opposed to the use
of "judge" in the title, or critical thereof, included the Atomic
Energy Commission, the Civil Aeronautics Board, the Depart-
ment of Commerce (including the Office of Foreign Direct In-
vestments, the General Counsel, and the Maritime Administra-
tion), the Federal Trade Commission, the Interstate Commerce
Commission, the Department of Health, Education and Welfare,
the Department of Justice, the Department of Labor and the
Department of the Treasury. The reader is reminded that these
agencies, as well as those favoring "judge" above, have radically
varying degrees of interest in the Examiner program and in the
use of Examiners. A tally of proponents and opponents has no
validity, but the scope of support and opposition has, and the
agencies and departments are reported for that very limited pur-
pose. A decision must be made upon the impact of the title change
upon agency function, keeping in mind that some agencies are

REC. 17. GOVERNMENT ATTORNEYS 385

closer to the process than others and any decision in this regard
will have a greater impact on them. Unfortunately, these do not
divide decisively in one direction or the other.

It is tempting to think that there must be some compromise
title upon which most interested parties can agree. There does
not appear to be one. Numerous suggestions have been offered,
including:

Adjudge Examiner

Adminijudge Federal Trial Examiner

Administrative Chancellor Hearing Officer

Administrative Judge Judicial Officer

Administrative Law Officer Presiding Officer

Administrative Trial Judge United States Trial Examiner

Administrative Trial Officer United States Trial Officer

One of the reasons that compromises seem so unpromising is
that the Examiners themselves and the agencies most strongly
supporting them feel that the term "judge" is a critical element
in any significant strengthening of the title, and that they fur-
ther feel that a title change without the word "judge" will pre-
clude further consideration of the matter for a number of years.

The Committee on Personnel proposes the title Administrative
Chancellor, believing that it indicates to the unfamiliar layman
or attorney the essentially formal character of the proceeding,
the independence and high status of the hearing officer, the dig-
nity and deference to be extended the office, and the necessary
distinctions to be made between administrative rulemaking and
adjudication on the one hand and Federal judicial proceedings
on the other. The Committee feels that this title is as appropriate
as any offered it to describe the varied functions of the full
range of examiners appointed under Section 11, and that it will
be as acceptable to as broad a base of agencies utilizing Exam-
iners as any title suggested to the Committee.

Must the Title be Uniform as to All Agencies?

With the agencies divided, it has been suggested that each
agency be left to determine for itself whether a change in title
is needed and what title is most appropriate for its hearing offi-
cers. Arguing against this is the assumption that the uniform
selection process, the sameness of status under Section 11 of the
Administrative Procedure Act and the similarities of function
would make such variations incongruous. Nevertheless, it is clear
that some agencies feel a strong need for the change to "judge"

386 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES

and the question was carefully weighed before the general prin-
ciple of the advantages of uniformity was adopted.

It has been suggested to the Committee that there is consider-
able variation in the functions of examiners. The far less formal
hearings deciding claimants' rights by Social Security examiners
are quite different from the complex economic proceeding of rate
making at the Federal Power Commission and both differ sig-
nificantly from the credibility determinations and fact finding re-
sponsibilities of the National Labor Relations Board examiner.
All three differ in turn from the fitness determinations of an
examiner for the Federal Communications Commission in a li-
censing renewal case. All of these differ from each other and from
the work of examiners in other agencies but all share in broad
general functions such as making evidentiary rulings, control-
ling the development of testimony, dealing with counsel, making
initial determinations of law and fact, etc.

It has also been suggested to the Committee as noted above,
since examiners range in grade from GS-13 to GS-16, that a
single title as honorific as "judge" would bestow inappropriate
formality and dignity upon proceedings that benefit from their
informal character.

The differences in duties, role and rank outlined above were
weighed against the advantages of uniformity before the Com-
mittee chose to make the title choice uniform.

Under the present law the agencies may adopt any title they
choose for internal administration, public convenience, law en-
forcement and similar purposes. This conclusion is based upon
an advisory letter sent the Federal Trial Examiner's Conference
by the General Counsel of the U.S. Civil Service Commission on
Feb. 5, 1969, which indicated that a uniform title established by
the Civil Service Commission was necessary for purposes of per-
sonnel administration, and for budgetary and fiscal matters, but
that agencies individually might characterize their examiners as
they chose for the other purposes noted. In neither case would
legislation be needed to accomplish the change.

In its June 16, 1969, survey inviting agency comment upon
tentative proposals, the distinction made by the General Counsel
of the U.S. Civil Service Commission was brought to the atten-
tion of agencies and departments. This was done to determine
how important the uniformity principle was thought to be, and
whether agencies might prefer to have individual initiative in
the matter of the title change.

The following agencies indicated a preference for a uniform

REC. 17. GOVERNMENT ATTORNEYS 387

solution : Federal Maiitime Commission, Federal Trade Commis-
sion, and Small Business Administration.

The followinjr ag-encies supported the permissible change by
individual agencies: Federal Power Commission and Housing
and Urban Development.

The reasons given in opposition were (1) that a risk of con-
fusion would be created by variations in the styling of examiners,
and (2) that the variations would be a source of rivalry in status
between agencies and would create pressure on the agencies not
using the most desired title to adopt it, especially if that title
were to include "judge." The virtues of uniformity were not ex-
plained beyond this. A limited variation was proposed by the
consultant. This would be to adopt a common title for all exam-
iners for budgetary and examination purposes. This would be
accomplished by the Civil Service Commission. Then, agencies
employing those in grade GS-16 would be permitted to experi-
ment with "Administrative Trial Judge" or other titles and
would thereby obtain a valuable experiential basis for evaluat-
ing, broadening or abandoning the reform. Part of the survey
response of the I.C.C. was especially relevant to this proposal :

We would also like to point out that there is a great difference in the
work of hearing examiners in different agencies. Also, the necessary de-
gree of legal and administrative knowledge and training is so varying in
different agencies that we do not believe a "broad brush" grant of the
title of Judge should be so generally applied, indicating equal Judge sta-
tus, to all the hundreds of hearing examiners who would be included. We
have heard no sound rebuttal of this point. It appears, therefore, that
the major, and perhaps the only, reason for asking for the change of
title to Judge, for all hearing examiners, regardless of the great range
of difference in the size, importance, and type of cases and procedures
handled within the full list of agencies affected, is to gain the broadest
possible support — a strength in numbers, united front approach, so to
speak.

Additionally, the ICC does not believe the ICC Commissioners should
be asked to take a position regarding the titles of staff personnel of other
governmental units; nor should members of other such units be asked to
vote on title designations for the ICC staff.

Thus, the consultant's proposal was one of uniform title for
Civil Service Commission purposes and of an "individual agency
option" on selection of title for GS-16 Examiners as an experi-
ment to determine the advantages of title changes. The proposal
was rejected by the Committee, because it would permit the use
of the title "judge" when this was thought inappropriate and
because it would introduce the possibility of a variety of titles
confusing to the bar and public, stimulating rivalry among agen-

388 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES

cies in bidding for Examiner favor.

The use of various titles by individual agencies, or two titles
among all agencies, would not appear to interfere with the use
of a single title for examination and personnel purposes by the
U.S. Civil Service Commission. The Commission did not respond
to this item of the survey, but the General Counsel's letter noted
above does not suggest that an agency by agency change would
interfere with the Commission's responsibilities. Since the en-
actment of the Act, agencies have used various titles, e.g., Trial
Examiners at the NLRB ; Examiners of Inheritance in the De-
partment of Interior ; and, earlier. Referees in the Social Security
Administration. The letter did question the feasibility of accom-
plishing a comprehensive change on an agency by agency basis.

The Committee adopted the recommendation that every de-
partment and agency effect the change of title, as it is presumed
to be in the public interest that the same title be used through-
out the Government. Although the law will still permit agencies
to adopt individual titles for the limited purposes noted above,
the thrust of the recommendation will be to prevent such experi-
mentation by individual agencies. This fourth recommendation
is thus separable from the first three and is designed solely to
assure uniformity in the styling of examiners. It is not essen-
tial to the accomplishment of the title change, as such, but is the
recommendation of the Committee as a policy matter.

Will the Title Change Affect Examiner Subordination?

Some agencies expressed concern lest the title change subtly
affect the relationship of the Boards and Commissions or execu-
tive officers of departments and the subordinate examiners. This
was clearly not the intention of those proposing the title change.
In its June 16, 1969, survey, a Committee proposal dealt with
this matter explicitly :

That this change should be accomplished in such manner that it will not
affect the concept of examiner independence, the subordination of examin-
ers to agency powers as provided in 5 U.S.C. 557(b), and the duty of
examiners to comply with reasonable and proper directions of their
respective departments or agencies in matters of administration.

After considering the responses and the law, it was the feel-
ing of the Committee that this was very clearly the case and
that neither the procedure proposed for accomplishing the
change of title nor the change of title itself could modify these
relationships. Hence, the Committee chose to drop this recom-
mendation altogether.

REC. 17. GOVERNMENT ATTORNEYS 389

Are Future Title Changes Barred?

The Committee repeatedly heard the argument from those
favoring "judge" that the adoption of any substitute would ef-
fectively bar consideration of that title for a number of years.
This is not the Committee's intention. The Committee, reacting
to the clear division of opinion among agencies as to the suit-
ability of the title "judge" chose what it regards as an equally
honorific title, and one to which such strong adverse reaction
was not received. It recognizes, however, that in practice the ad-
vantages claimed for a title change may not be realized and that
experience with Administrative Chancellor may eventually lead
to a renewal of the debate. The Committee notes this in simple
candor. It does not seek to prejudice the consideration of any
proposal based upon additional experience and reflection in the
future.

How Will Administrative Chancellor Be Received?

In its survey of June 16, 1969, Administrative Chancellor was
one of three titles offered agencies to replace the present title of
Hearing Examiner.

It was criticized by three agencies as being susceptible of con-
fusion with the officers of the Judicial branch and by one as mis-
leading as to function, leading to confusion with religious or
educational institutions or with courts of probate or equity. It
was supported explicitly by only one, although several others in-
dicated that it would be acceptable to them.

The debate as to title change has been so thoroughly polar-
ized by the proposal of "judge" that it is difficult to predict with
confidence the reception Administrative Chancellor will have.
Its historical associations with the system of justice of English
speaking peoples, its strong associations with high station, re-
sponsibilities and independence in all contexts, and its specific
tie to the regulatory process through the addition of "adminis-
trative" would seem to make it an attractive replacement for
Hearing Examiner.

B. Recruitment and Selection of Examiners
Recommendation 5

That the Civil Service Commission enlarge the base of
recruitment and the number of qualified candidates avail-
able for appointment to hearing examiner positions through
recognition of trial experience as one basis for qualification.

390 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES

Recommendation 6

That the Civil Service Commission on an experimental
basis amend the selective certification system as now^ prac-
ticed in the appointment of hearing examiners and provide
in lieu thereof a system whereby the number of qualified
candidates for appointment to hearing examiner positions
would be enlarged through the use of a general register for
departments and agencies generally, with the proviso for
additional credit for specific relevant professional experience
or selective certification for departments and agencies
which justify a need on a current basis for such specific
relevant professional experience to the Civil Service Com-
mission in order to permit a meaningful comparative evalu-
ation of the system currently in effect, a report to be made
to the Administrative Conference after three years of
experience.

Recommendation 7

That to effectuate the objectives of Recommendation 6
the chairman of the Administrative Conference appoint spe-
cial committees from time to time to evaluate the standards
of specific relevant professional experience proposed to the
Civil Service Commission by any department or agency as
justifying experience, the present selective certification
agreements to serve until the new standards are adopted by
the Civil Service Commission.

Recommendation 8
That an intern program on an experimental basis to sup-
plement the direct appointment of examiners is recom-
mended to the Civil Service Commission for immediate study
and for adoption if practicable in the judgement of the
Commission.

Recommendation 9
That the Veterans Preference Act be amended to permit
the selection of examiners for each vacancy from the top
ten available persons appearing on the register, preserving
examination grades and ranking to facilitate selection and
eliminating Veterans Preference Points (5 to 10) .

Why Consider the Selection Procedure?
For a number of years an extensive debate has raged among
those most interested in the examiner program as to whether
the recruitment and selection procedures were producing the op-

REC. 17. GOVERNMENT ATTORNEYS 391

timum quantity and quality of candidates and appointees. Nu-
merous issues have been raised in this debate, such as whether
sufficient publicity has been ^nven nationwide to the number of
positions, to the perquisites of examiners and to the examina-
tion procedures; the impact upon potential attorney-applicants
of the administrative law requirements; the reliance upon confi-
dential inquiries of associates of applicants with inescapably
varying subjective factors of scoring; the burdensome character
and extent of materials and information required of the candi-
date for examination purposes; the allegedly partisan role of
some members of the personal interview panels; and the difficul-
ties associated with obtaining a reevaluation and reranking once
the examination has been passed successfully. All of these ques-
tions, however, have lacked the degree of controversy attached
to the two general questions of most far-reaching significance
in the GS-16 examiner program :

(1) Should expertise be a prerequisite to appointment as
an examiner; and

(2) What freedom should the agency have in selecting
examiners.

Both questions relate to the potential costs or efficiencies of reg-
ulatory programs.

Under the present system, agencies assure the appointment of
specialist attorneys already familiar with the substantive issues
of the agency by obtaining from the Civil Service Commission a
"selective certificate" whenever an Examiner vacancy occurs.
The candidates on the "selective certificate" are taken in order
from the general register, regardless of their place on that regis-
ter, on the basis of their prior qualifying experience in the ap-
propriate area of specialization. On the "selective certificate"
they appear in the order in which they appeared on the general
register, but when there are only a few candidates with the
specialized experience they may move from near the bottom of
the general register to the very top of the "selection certificate."
A concrete illustration is provided later in this report.

Selective certificates are not provided agencies merely for the
asking. An agency must first justify to the Civil Service Com-
mission that its work is of such a specialized and technical char-
acter that a limiting experimental prerequisite is necessary for
the effective conduct of its business. Such requirements are made
public by the U.S. Civil Service Commission in the examination
announcement. The following language and examples from An-
nouncement No. 318 are provided to illustrate :

392 ADMINISTRATIVE CONFERENCE OF THE UNITED STATES

Special Qualifications for Filling Certain Hearing Examiner Positions

In filling Hearing Examiner positions in certain Federal regulatory
bodies, prior consideration is given to eligible applicants whose adminis-
trative law experience includes participation in cases comparable to
those coming before these bodies. . . .

. . . Listed below are the special qualifications for the positions in
these bodies.

In order to obtain prior consideration in filling a position in one of
these bodies, an eligible applicant must have clearly established in his
application and related papers, in the manner prescribed in the examina-
tion announcement, that he has acquired the special qualifications for
that position within the 7 years immediately preceding the date of his
application.

When it is found that the register does not contain the names of a suf-
ficient number of eligibles possessing the specia